Dreamtea Pty Ltd v Ochkit Pty Ltd & Anor; Mistranch Pty Ltd & Ors v Ochkit Pty Ltd & Anor [2017] QSC 9

SUPREME COURT OF QUEENSLAND CITATION: Dreamtea Pty Ltd v Ochkit Pty Ltd & Anor; Mistranch Pty Ltd & Ors v Ochkit Pty Ltd & Anor [2017] QSC 9 PARTIES: DREAMTEA PTY LTD (ACN 069 396 310) (Plaintiff) v OCHKIT PTY LTD (ACN 010 874 058) (First Defendant) and WILLIAM JOHN HENRY HOUWING and CHRISTINE LESLIE HOUWING (Second Defendants); MISTRANCH PTY LTD (ACN 069 396 398) (First Plaintiff) and DREAMTEA PTY LTD (ACN 069 396 310) (Second Plaintiff) and GEORGE KLENOWSKI (Third Plaintiff) v OCHKIT PTY LTD (ACN 010 874 058) (First Defendant) and WILLIAM JOHN HENRY HOUWING and CHRISTINE LESLIE HOUWING (Second Defendants) FILE NO/S: SC No 1 of 2010; SC No 71 of 2010 DIVISION: Trial PROCEEDING: Claim ORIGINATING COURT: Supreme Court at Mackay DELIVERED ON: 13 February 2017 DELIVERED AT: Cairns HEARING DATE: 4, 5, 6 and 7 October 2016 JUDGE: Henry J -- 1 of 61 -- 2 ORDERS: Orders in SC 1/2010 1. Judgement for the plaintiff in the amount of $2,865.70 damages plus interest to be determined. 2. It is declared that the plaintiff is entitled to a caveat over the Houwing security lot being lot 4 on SP218357 in the county of Carlisle Parish of Bassett, being that land contained in title reference 50792285. 3. I will hear the parties as to the calculation of interest, as to whether the damages are payable by both defendants or only the first defendant and as to costs at 9.15am on 29 March 2017 at Mackay. 4. Written submissions as to interest and costs are to be filed and served by 4pm on 7 March 2017. Orders in SC 71/2010 1. Judgment for the First Plaintiff in the sum of $14,247.56 plus interest to be determined. 2. The claims of the Second and Third Plaintiffs are dismissed. 3. I will hear the parties as to interest and costs at 9.15am on 29 March 2017 at Mackay. 4. Written submissions as to interest and costs are to be filed and served by 4pm on 7 March 2017. CATCHWORDS: CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – BREACH OF CONTRACT– where invoices not paid on time – where invoices not paid – whether breach occurred – where a declaration as to a caveat was sought – whether the plaintiff is entitled to a declaration of caveat DAMAGES – MEASURE AND REMOTENESS OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT – REMOTENESS AND CAUSATION – where compensatory damages sought – where nominal damages sought – where loss of use of monies claimed – where damages for forced sale of property claimed – whether particular damages sought were claimable CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – AGENCY – COSTS – PARTIES AND NON- PARTIES – NON-PARTIES – OTHER CASES – where costs were incurred defending a negligence claim – where defendant -- 2 of 61 -- 3 was not a party to that claim – whether the agent indemnifies the principle as to costs incurred in defending the claim Hadley v Baxendale(1854) 156 ER 145, cited Sheffield Corporation v Barclay [1905] AC 392, cited Famatina Development Corporation Ltd [1914] 2 CH 271, followed Luna Park (NSW) Ltd Tramways Advertising Pty Ltd (1938) 61 CLR 286, followed Holland v Wiltshire (1954) 90 CLR 409, followed Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, distinguished Jones v Canavan [1972] 2 NSWLR 236, cited Bartels v Behm (1990) 19 NSWLR 257, cited Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, followed Vella’s Plant Hire Pty Ltd v Mistranch Pty Ltd & Ors [2012] QSC 77, cited National Roads & Motorists’ Association v Whitlam (2007) 25 ACLC 688, cited G E Dal Pont, Law of Agency, Third Edition COUNSEL: S J Deaves for the plaintiffs K M Wilson QC for the defendants SOLICITORS: Macrossan & Amiet for the plaintiffs Australian Property Lawyers for the defendants [1] The parties are in dispute over sundry financial issues in the wake of the completion of a joint development by subdivision of two adjoining lots of land north of Mackay at Florence St, Eimeo. [2] The lots and the people and entities connected with them are: (a) Lot 15 on RP 732984 (“the Dreamtea land”). Lot 15 was owned by Dreamtea Pty Ltd (“Dreamtea”)1 which in 2006 transferred half of its interest to itself as trustee2 of the Klenowski Superannuation Fund, a superannuation fund of which Mr George 1 Which also trades as Far East Developments - T1-41 L45. 2 Ex 1 p53. -- 3 of 61 -- 4 Klenowski is the sole member.3 Mr Klenowski is the sole shareholder and director of Dreamtea and Mistranch Pty Ltd (“Mistranch”).4 Mistranch carries on an engineering consultancy business trading as Australian Mining Engineering Consultants (“AMEC”),5 which managed the carrying out of the development. (b) Lot 26 on RP 732984 (“the Houwing land”). Lot 26 is owned by Mrs Christine Houwing and her husband Mr William Houwing (“the Houwings”). The Houwings, who ran a financial planning business in Mackay, are the sole directors and shareholders of Ochkit Pty Ltd (“Ochkit”)6, which was a party to the agreement to develop the lots. [3] The subdivision of Lots 15 and 26 in combination gave rise to nine lots; numbers one to five on the Houwings’ land and numbers six to nine on the Dreamtea land. [4] During the subdivision development, the Houwings and their company, Ochkit, allegedly delayed in signing title documents and failed to make payments of various expenses of the development in a timely way, or at all, with allegedly adverse consequences to Dreamtea. This gave rise to one of the present claims, numbered S1/2010, by Dreamtea against Ochkit and the Houwings. That claim was heard in the Supreme Court at Mackay with another claim, pursuant to a direction of the Court. [5] The other claim, numbered S71/2010, arises from an incident during the development when a dozer rolled, injuring its operator, an employee of a business performing work on site for Mistranch. The operator sued his employer and Mistranch. The employer consequently brought third party proceedings against Mistranch, Dreamtea and Mr Klenowski. The Houwings were not included as parties to the third party claim, which was dismissed.7 Nonetheless by claim S71/2010 Mistranch, Dreamtea and Mr 3 T1-42 L16. 4 T1-8 L45, T1-9 L24. 5 T1-9 LL24-43. 6 T2-44 L17. 7 Vella’s Plant Hire Pty Ltd v Mistranch Pty Ltd & Ors [2012] QSC 77. -- 4 of 61 -- 5 Klenowski seek indemnification from the Houwings for costs incurred in defence of the third party action. [6] These reasons will deal with the two claims separately, beginning with the much more broad ranging of the two, claim S1/2010. PART A: CLAIM S1/2010 Background [7] Dreamtea entered into a written agreement with the Houwings and Ochkit on 17 July 2007.8 The agreement did not record that Dreamtea was entering into the agreement on the basis it was half owner of the Dreamtea land in its own right and half owner as trustee for the Klenowoski Superannuation Fund. Dreamtea’s Mr Klenowski did not expressly tell the Houwings they were party to an agreement which involved his superannuation fund but, as he explained, they would have known of Dreamtea’s dual capacity from invoices issued even before the agreement was entered into.9 I accept they did know. For example, it was readily apparent on the face of AMEC’s written request to the Houwings’ secretary for payment of an invoice two months before the agreement that Dreamtea was already paying its 4/9th share half in its own right and half as trustee of the Klenowski Superannuation Fund.10 [8] The agreement’s recitals recorded the parties had agreed to jointly develop Lots 15 and 26 and that a court order constituting the planning decision notice had been made.11 [9] The earlier progress in the development had been slow. Mr Klenowski had first written to the Houwings suggesting the development back in 2000.12 There was a period of delay in securing development approval, but that was eventually given on 10 August 2004 in a Planning and Environment Court consent order.13 8 Ex 1 pp1-52. 9 T1-50 L20 – T1-53 L20. 10 Ex 24. 11 Ex 1 p2. 12 Ex 1 p365, T1-10 L8. 13 Ex 1 p14, T1-12 L23. -- 5 of 61 -- 6 [10] Substantive work on the development had occurred prior to the written agreement being entered into. Much of it was funded by Dreamtea.14 The agreement provided, in lieu of payment for the project work already performed or paid for by Dreamtea, Ochkit would pay the whole cost of a booster pump station required for four of the more elevated of the subdivision’s nine lots, namely the Houwings’ Lots 3, 4 and 5 and Dreamtea’s Lot 6.15 [11] As to future arrangements, clause 2.2 of the agreement required Dreamtea to supervise the project to ensure the carrying out of civil works, work in relation to lot reconfiguration, payment of council charges and obtaining of approvals, such that separately titled lots with all services and infrastructure installed would be ready for sale. Clause 2.4 provided all future costs would be borne in 4/9th shares by Dreamtea and 5/9th shares by Ochkit, consistently with the proportion of nine subdivided lots on the respective lands of the parties under the development approval. [12] Clause 2.8 of the agreement acknowledged AMEC had and would continue to provide consulting services for the project. It recorded the parties’ agreement they would pay AMEC for their respective share of the costs of such services at the rate of $110 per hour. [13] Clause 8 of the agreement provided: “Each of the parties shall take all steps, execute all documents and do all things reasonably required by the other parties to give effect of (sic) the terms of this agreement.” (“the duty to co-operate clause”) [14] Clause 2.2 of the agreement provided Dreamtea would arrange the project finance, which was defined as “a loan obtained from a bank to provide all of the money to pay the Project Costs”.16 No project finance was ever arranged. Mr Klenowski, the major witness for the plaintiff, was evasive when asked to concede that fact, asserting it was unnecessary and not requested.17 14 Ex 1 p6 [2.3]. 15 Ex 1 [2.3], T1-23 L2. 16 Ex 1 [2.2], [2.5]. 17 T1-54 LL7-39, T2-9 L33. -- 6 of 61 -- 7 [15] Mrs Houwing, the sole witness for the defendants, also seemed reluctant to be candid on this topic. She testified they had been left with no choice but to arrange their own finance,18 explaining that when Mr Klenowski announced he had his own money for the project the Houwings arranged their own finance, initially borrowing $400,000 from their bank, Elders Rural (“Elders”),19 based on then estimates of the project’s likely cost. Actually, as Mrs Houwing seemed to concede,20 this occurred well before the written agreement was finalised. Exhibited correspondence from Elders shows the date of Elders’ letter of offer for Ochkit’s loan facility to $400,000 was 5 July 2007, 12 days before the written agreement was entered into.21 Moreover, the facility had been in place even earlier, since 28 September 2006, with a $300,000 limit.22 [16] It is quite obvious in entering into the agreement the parties were each content that each should fund their own payments of their proportionate share of the ongoing costs rather than Dreamtea arranging project finance as contemplated by clause 2. [17] The project was initially estimated to cost $800,000 but ended up costing about $1.1 million.23 However, even as the project progressed neither party suggested project finance should be arranged and each remained content to meet the rising costs through their own devices. For example, the Houwings increased Ochkit’s loan limit to $620,000 on 31 March 2008.24 [18] To remove doubt I reject the contention advanced in this case that the failure of Dreamtea to arrange project finance was a breach of the contract. The parties conduct demonstrates each waived the benefit to them of the requirement that Dreamtea arrange project finance. The dispute 18 T2-45 L16. 19 T2-45 L22. 20 T2-68 L43. 21 Ex 21. 22 Ex 23. 23 T1-56 L39; Ex 28 shows an even more optimistic total estimate at an unspecified earlier stage. 24 Ex 21. -- 7 of 61 -- 8 [19] There are basically three forms of misconduct complained of in the plaintiffs’ fourth further amended statement of claim (“SOC”): (a) that Ochkit failed to pay for its share of certain costs incurred in and invoiced during the development in a reasonable time or, in some instances, at all;25 (b) that Ochkit and the Houwings failed to sign and return in a timely way easement and covenant documents, required to give effect to the development in accordance with its local authority approval, and transfer documents, required to resolve ownership in respect of Lots 7 and 8 of the subdivision, with the alleged result that:26 (i) there was a delay in the sales of Lots 6 and 8 and a consequent loss of Dreamtea’s use of monies;27 and (ii) Dreamtea was unable to service other loans and thus forced to sell its property at 2/52-54 Miskin Street, Toowong.28 (c) that the Houwings refused to consent to Dreamtea lodging a caveat over one of its lots despite it being a term of the written agreement between the parties that such a consent would be given.29 [20] The relief sought by the plaintiffs falls into five categories: (a) nominal damages for late payment by Ochkit of its share of certain costs invoiced during the development (“the nominal damages claim”);30 (b) compensatory damages, alternatively contribution and/or restitution in the amount of $3,512.46, for non-payment by Ochkit of its share of 25 SOC [3], [3B], [3C]. 26 SOC [9]. 27 SOC [10]. 28 SOC [10A], [10B]. 29 SOC [17]. 30 SOC [4]. -- 8 of 61 -- 9 certain costs invoiced during the development (“the compensatory damages claim”);31 (c) damages or equitable compensation for loss of use of monies in the sum of $18,131.35 from the delayed sales of Lots 6 and 8 (“the loss of use of monies claim”);32 (d) damages or equitable compensation in the amount of $77,234.75 for losses, costs and expenses in association with the early sale of the Miskin Street property (“the forced sale claim”);33 (e) a declaration as to the plaintiffs’ entitlement to a caveat over the Houwings’ security lot (“declaratory relief re caveat”).34 [21] The defendants dispute the plaintiffs’ entitlement to relief at several levels in several ways, including by asserting a failure to prove the various alleged losses and the defendants’ alleged responsibility for them. [22] Before proceeding to consider each claim to relief it is necessary to first understand the degeneration in the relationship between the players when the project was frustratingly close to completion. The degeneration in the relationship [23] On receipt of project invoices the Houwings would send them to their book-keeper who would forward them to Elders which would in due course pay the relevant amount directly to the invoicing entity.35 That necessarily took longer than would occur if the Houwings were paying directly, which Mr Klenowski did not like.36 31 SOC [4], [4C]. 32 SOC [10]. 33 SOC [10A], [10B]. 34 SOC [17], prayer for relief. 35 T2-46 L30. 36 T2-52 L40. -- 9 of 61 -- 10 [24] As the project progressed through 2007 into 2008 there were some instances when Ochkit failed to make timely payment of invoices, not the subject of this action, evidently resulting in some commercial embarrassment to Mr Klenowski.37 It was in late 2008 and early 2009 however that more marked difficulties arose between the parties. Mr Klenowski and Mrs Houwing each gave evidence about some of those difficulties. Mr Houwing did not give evidence because of ill health and I therefore draw no adverse inference from his absence.38 [25] Mrs Houwing testified that events took a marked turn for the worse on 22 October 2008, whilst the Houwings were in Sydney for a relative’s birthday, when they received a telephone call from Mr Klenowski. He told them he was sick of the Council, that he could not deal with it any more, that he was not able to finish the project and was going to Moranbah to work.39 [26] Mr Klenowski denied saying such things to the Houwings and denied abandoning the project about then.40 However, while doing so he did testify: “I never said, full stop, that I would not continue doing work on the project in two thousand – I did say at some stage that it had to be agreed upon, which was in the agreement that it had to be agreed to be the Houwings and Dreamtea.”41 [27] Moreover, it was put to Mrs Houwing that all Mr Klenowski had said on 22 October was that he had had a gutful of Council and felt like walking away from the project.42 [28] I accept a telephone conversation of 22 October 2008 to the general effect recounted by Mrs Houwing did occur, although I do not accept the words used conveyed or were understood as conveying an actual abandonment of the project by Mr Klenowski or Dreamtea. 37 Ex 7-11. Re-examination, at T3-17,18, demonstrated generally prompt responses when the oversight in paying such invoices was drawn to the Houwings’ attention. 38 T2-50. 39 T2-47 L31. 40 T1-61 LL5-12. 41 T1-61 L15 42 T3-10 L15. -- 10 of 61 -- 11 [29] By this era the Houwings had left Mackay and were living at Esk. Because of the call of 22 October 2008, they travelled to Mackay and established a contact with Council to receive guidance on what needed to be done.43 By this stage the material physical work had been completed but minor compliance tasks remained. The Houwings did not remain in Mackay but thereafter co-ordinated the performance of required tasks, liaising with the Council contact and with Mr Klenowski’s secretary, Lorraine Wright, about what was to be done.44 They did not speak with Mr Klenowski who Mrs Houwing understood was away at Moranbah.45 The very fact that they continued to deal with Mr Klenowski’s secretary in his absence makes it obvious they did not understand Mr Klenowski had abandoned the project. [30] On 22 January 2009 Dreamtea’s solicitors, Macrossan & Amiet wrote to the Houwings expressing concern inter alia about significant outstanding payments due from them on invoices and seeking prompt attendance to payment.46 [31] Then, in a memorandum to the Houwings on AMEC letterhead dated 3 February 2009, on the subject “Florence St Eimeo”, Mr Klenowski wrote: “Australian Mining Engineering Consultants (AMEC) and Access Secretarial ceased doing work for this Project on 31 January 2009. Future work will only be done if jointly requested by J and C Houwing, Dreamtea Pty Ltd and The Klenowski Super Fund. Rates and payment terms are to be agreed prior to any work being done.”47 [32] Invoices later issued by AMEC show it did do further work on the project and, according to Mr Klenowski, the Houwings made no complaint about that.48 However, according to Mrs Houwing the Houwings did not ask for or agree to the performance of further work on the project by AMEC or Access Secretarial after the receipt of Mr Klenowski’s memorandum.49 [33] The Second Further Amended Defence (“the Defence”) seeks to frame Mr Klenowski’s memorandum of 3 February 2009 as an agreement no further work 43 T2-47 L40. 44 T2-48 LL1-15. 45 T2-48 L20. 46 Ex 12. 47 Ex 5. 48 T2-13 L41. 49 T2-49 L45. -- 11 of 61 -- 12 would be done on the project unless requested by all parties to the agreement.50 In fact it was a unilateral announcement which on its terms only related to future work by AMEC and Access Secretarial. [34] Mrs Houwing testified that prior to receiving the memorandum the Houwings had been attempting to speak with Mr Klenowski, unsuccessfully trying to raise him on his telephone and even contacting his solicitor pleading for Mr Klenowski to talk with them, only to be told Mr Klenowski would not talk with them.51 Subsequent to the memorandum Mrs Houwing kept trying to telephone Mr Klenowski, two or three times a month, but he did not answer her calls.52 [35] Mrs Houwing did not actually write to Mr Klenowski or his solicitors about this failure to communicate.53 However, Mr Klenowski appeared to accept that in the first four or five months of 2009 the Houwings made several requests to meet with him to discuss the project and he refused to meet them.54 On his account he suggested they talk to his lawyer. He claimed to be unaware of whether they had done so but in testimony on a prior occasion, on 25 November 2015, he said he recalled Mrs Houwing had tried to communicate with him through his lawyer.55 He subsequently seemed to accept that in the first half of 2009, before Dreamtea made a statutory demand in June 2009, Mrs Houwing was trying to arrange a meeting with him through his lawyer.56 [36] It is likely Mr Klenowski’s phone call of 22 October 2008, his memorandum of 3 February 2009 and his avoidance of Mrs Houwing’s repeated attempt to contact him caused the Houwings to reason they should hold off making payments or signing documents needed to finalise the project until Mr Klenowski would resume speaking with them. Their device of inaction as a form of brinkmanship only served to delay the final completion of the project, contrary to all sides’ interests. 50 Defence [6c]. 51 T2-48 L41 – T2-49 L13. 52 T2-49 L17. 53 T2-55 L34. 54 T1-69 L13. 55 T1-69 L39. 56 T1-70 L16. -- 12 of 61 -- 13 The nominal and compensatory damages claims [37] It is convenient to deal with the nominal and compensatory damages claims together and to begin by tabulating relevant information about the invoices to which those claims relate:57 Invoice Number Invoice Date To, From & For Invoice Total $ Ochkit’s Share $ Date of Ochkit’s Payment/ Unpaid 1086 06.03.08 To Matts Gustofson c/o AMEC from G M Novikov for inspection of constructed footings and slab, concrete walls, trusses and roofs and issuing inspection certificate 16 for pumping station.58 660.00 366.67 Unpaid 08/010 18.09.08 To Dreamtea, Klenowski Super Fund & Ochkit from AMEC for site work, supervision, accounts, phones, faxes, emails, consumables, expenses.59 4,658.09 2,587.83 26.08.09 8327 10.11.08 To Ochkit & the Houwings from Dowdens Pumping for work not specified in the invoice.60 8,137.80 8,137.80 2011 08/016 10.12.08 To Dreamtea, Klenowski Super Fund & Ochkit from AMEC for site work, supervision, survey, accounts, phones, faxes, emails, consumables, expenses.61 7,614.90 4,230.50 26.08.09 08/019 01.02.09 To Dreamtea, Klenowski Super Fund 3,295.77 1,830.99 26.08.09 57 The particulars of these invoices as alleged in the SOC appear in the SOC at [3] and [3B] but are here tabulated together in chronological sequence in accordance with the facts. 58 Ex 1 p175. 59 Ex 1 pp159, 164. 60 Ex 1 p179. 61 Ex 1 pp160, 161, 165, 166. -- 13 of 61 -- 14 & Ochkit from AMEC for site work, supervision, survey, accounts, phones, faxes, emails, consumables, expenses.62 6077 24.02.09 To Dreamtea, Ochkit & the Houwings from Macrossan & Amiet Solicitors for professional fees to prepare and register transfers, survey plan, easements and covenants and disbursements for the registration fees.63 9,298.00 5,165.56 26.08.09 08/031 15.06.09 To Dreamtea, Klenowski Super Fund & Ochkit from AMEC for gypsum, fertiliser, herbicide and verge mowing, edge trimming, clean up as required by Council.64 292.44 162.46 Unpaid 09/025 08.12.09 To Dreamtea, Klenowski Super Fund, Ochkit & the Houwings from AMEC for off maintenance remedial works by G Klenowski ($316.60), Napier’s Mowing ($200) & Mackay Paving & Retaining Walls ($150).65 733.26 407.36 Unpaid 09030 08.12.09 To Dreamtea, Dreamtea ATF The Klenowski Super Fund and Ochkit from Access Secretarial & Project Support for paperwork, memos, emails and phone calls re off 192.50 106.94 Unpaid 62 Ex 1 pp162, 167. 63 Ex 1 pp141-144. 64 Ex 1 p176. 65 Ex 1 p177. -- 14 of 61 -- 15 maintenance work and inspection.66 16001 10.12.09 To Dreamtea, Ochkit & the Houwings from Macrossan & Amiet for disbursements for registration and requisition fees and sealing of survey plan.67 807.46 448.58 Unpaid 16217 15.12.09 To Dreamtea, Ochkit & the Houwings from Macrossan & Amiet for professional fees itemised in an attached schedule.68 2,426.81 1,348.23 Unpaid 1180 01.12.09 To Dreamtea, Dreamtea ATF The Klenowski Super Fund, Ochkit & the Houwings from G M Novikov for off maintenance inspection and sign off.69 1,210.00 672.22 Unpaid Payment records [38] During the project Mr Klenowski’s secretary maintained a periodically updated expenses schedule for the whole of the project.70 It recorded, inter alia, the apportionments of amounts owing in respect of invoices and dates of payment thereof. Mrs Houwing testified versions of that schedule would be forwarded from Mr Klenowski’s secretary, Lorraine Wright, from time to time and the Houwings would fill in the columns relating to the date Ochkit’s share of an invoice was paid by reference to Elder’s advice of payment.71 While not expressly stated it appears the endorsed schedule or at least the information about payment would then be returned to Ms Wright. [39] Most of the above invoices and records of their apportionment and payment do not appear in the expenses schedule maintained by Mr Klenowski’s secretary. It appears 66 Ex 1 p178. 67 Ex 1 pp169, 170, 171. 68 Ex 1 p168, ex 13. 69 Ex 1 p172. 70 Ex 18, T2-34 L47 – T2-35 L30. 71 T2-47 L5. -- 15 of 61 -- 16 from the tendered expenses schedule that it ceased recording references to invoices received beyond 27 February 2009. Of the above invoices that do appear in the schedule – invoices 08/010, 08/016 and 08/019 – none have an entry in the column purporting to record the date of payment by Ochkit. However, the SOC does plead, and it is admitted, those invoices, and invoice 6077, were paid by Ochkit on 26 August 2009. Invoice 1086 from G M Novikov [40] Invoice 1086 was for engineering inspections of the pump station by Mr Novikov, the project engineer.72 Mr Klenowski testified it would have been sent to the Houwings around 6 March 2008 when it was received by AMEC.73 According to clause 2.3 of the written agreement the “whole cost” of the booster pump station was to be paid by Ochkit. That clause referred to the anticipated cost by reference to quotes in the agreement’s schedule G, which included the cost of the engineer’s inspection of the work.74 However, according to Dreamtea’s claim it only asserts Ochkit was responsible for 5/9ths of the amount of invoice 1086.75 In any event Mr Klenowski testified Ochkit’s share of invoice 1086 was not paid by Ochkit and the invoice was paid by Mistranch,76 in full on 12 March 2008.77 Mr Klenowski testified Mistranch was in turn reimbursed by Dreamtea as part of a payment on 21 August 2014.78 [41] Mrs Houwing testified she had not seen this invoice in the past.79 Lending persuasive support to her position is that the invoice does not appear in Dreamtea’s schedule of project expenses notwithstanding that it comes within the era covered by the schedule. So too is the oddity that, perhaps in a processing error, the invoice was paid by Mistranch and in full, not 4/9ths, only 6 days after it was issued in March 2008. Mr Klenowski’s assertion the invoice “would have been” sent to the Houwings 72 T1-22 L36. 73 T1-23 L17. 74 Ex 1 p49. 75 SOC [3B]. 76 T1-22 L46, T1-23L 22. 77 Ex 19, T2-37 L32. 78 Ex 1 p198, T2-37 LL5-20. 79 T2-58 L23. -- 16 of 61 -- 17 when received appears likely wrong. Nonetheless it is not suggested the invoice is not genuine or that the work performed was not a project cost. [42] Dreamtea’s entitlement to this component of its claim appears unassailable. Whether the non-payment is a breach of contract, is discussed further below. However, the SOC pleads an alternative restitutionary pathway, namely that Dreamtea paid Ochkit’s share of the invoice under legal and or moral compulsion, discharging Ochkit’s liability so that if Dreamtea is not compensated Ochkit will have been unjustly enriched. [43] That pathway to liability can be upheld forthwith. The specialised work in question was essential to the development and to the mutual benefit of the owners. The inference that an owner would be unjustly enriched without making a proportionate contribution to the cost of such work is compelling. Dreamtea’s claim to damages for this sum should succeed. Invoice 08/010 from AMEC [44] Mr Klenowski testified AMEC’s invoice 08/010 related to construction work done at the project.80 He explained it would have been emailed to the Houwings on 18 September 2008, the date on the invoice, on the basis all his invoices were sent immediately.81 He testified Ochkit or the Houwings eventually paid the invoice – presumably their 5/9th share – in about June or July 2009, after a creditor’s statutory demand.82 In that context it appears Mr Klenowski was thinking of a payment of $8,649.32 made by Ochkit on 26 August 2009 to AMEC after a winding up application was filed against it.83 That payment represents the total of Ochkit’s shares of this invoice as well as invoices 08/016 and 08/019 ($2,587.83 + $4,230.50 + $1,830.99) and it is admitted on the pleadings that Ochkit paid its share of invoice 08/010 on 26 August 2009. The payment on that date represents a delay of about eleven months, obviously an unreasonably long delay in payment. 80 T1-16 L8. 81 T1-16 L20. 82 T1-16 L40. 83 Ex 1 pp390-392. -- 17 of 61 -- 18 [45] Dreamtea’s claim for nominal damages in respect of the delayed payment therefore has substance. Invoice 8327 from Dowdens Pumping [46] Invoice 8327 for work performed on the development’s only pump station was dated 10 November 2008. Mr Klenowski understood, and Mrs Houwing agreed, it was paid by Ochkit or the Houwings in 2011 after Dowdens Pumping made a statutory demand.84 [47] This is another invoice which, had it been issued to or paid by Dreamtea, might be expected to be in the tendered expenses schedule. Its absence from the schedule is unsurprising. It was an invoice directed to Ochkit and the Houwings. There is no evidence this invoice was issued to or paid by Dreamtea. [48] Dreamtea has not established any loss suffered by it in connection with the delay in paying this invoice. Invoice 08/016 from AMEC [49] Mr Klenowski testified invoice 08/016, relating to project construction work, would also have been emailed to the Houwings by his secretary around the date on the invoice, 10 December 2008.85 Mrs Houwing estimated or guessed she had not seen this invoice until approaching February 2009.86 [50] Mr Klenowski recalled the Houwings paid the invoice – presumably their 4/5th share – in about June 2009 after a creditor’s statutory demand. In fact, the payment was not made until 26 August 2009, a delay of about eight months. It was an unreasonably long delay in payment. [51] Dreamtea’s claim for nominal damages in respect of the delayed payment therefore has substance. 84 T1-26 L6, T2-63 L20. 85 T1-16 LL30-45. 86 T3-18 L43. -- 18 of 61 -- 19 Invoice 08/019 from AMEC [52] Mr Klenowski testified invoice 08/019 also related to project construction work and would have been sent to the Houwings by email on about the date on the invoice, 1 February 2009.87 Mrs Houwing recalled this invoice came with a cluster of invoices.88 This may have been a reference to a number of overdue invoices being re-sent in June 2009 but I do not infer that was the first occasion the invoice was received.89 It was likely received by the Houwings in the normal course soon after its issue. [53] Mr Klenowski said the invoice was also paid after the creditor’s statutory demand. [54] AMEC agitated for payment prior to resorting to a statutory demand. By email of 21 April 2009 AMEC emailed the Houwings a memorandum, attaching copies of invoices 08/010, 08/016 and 08/019, complaining their total of $8,649.32 still had not been paid by Ochkit and asking for payment to be arranged “ASAP”.90 As mentioned above, it was this amount which was eventually paid by Ochkit on 26 August 2009 after a winding up application had been filed against it.91 That represents an apparently unreasonable delay of over six months in payment of this invoice [55] Dreamtea’s claim for nominal damages in respect of the delayed payment therefore has substance. Invoice 6077 from Macrossan & Amiet Solicitors [56] Macrossan & Amiet, solicitors handling registration of survey plans, transfers and other documents required for the development, forwarded invoice 6077 to the Houwings by email on 24 February 2009, the date of the invoice.92 Their covering 87 T1-17 LL2-14. 88 T3-19 L13. 89 Ex 1 p389. 90 Ex 1 p163, Ex 2, T1-17 L41. 91 Ex 1 p390. 92 Ex 1 pp145, 146, 237, T1-16 L4. -- 19 of 61 -- 20 correspondence identified what Ochkit’s proportionate share of the invoice was and indicated Macrossan & Amiet looked forward to receiving payment of that share. [57] On 1 April 2009, in an email to the Houwings, Macrossan & Amiet noted the amount was outstanding and enquired when it might be received. In further correspondence to the Houwings on 29 May 2009 Macrossan & Amiet noted they were still waiting for payment of the amount.93 [58] The plaintiff pleads and the defendants admit that the amount due was eventually paid by Ochkit on 26 August 2009. That common ground on the pleadings does not reveal to which entity the payment was made, Dreamtea or Macrossan & Amiet. [59] Mrs Houwing testified they did not pay the bill for six months “because we didn’t employ Macrossan & Amiet”.94 As was admitted by Dreamtea, neither the Houwings or Ochkit retained Macrossan & Amiet or were given a costs disclosure by Macrossan & Amiet and it is not suggested Macrossan & Amiet would have a right of action against them for the outstanding fees.95 However, I do not accept Mrs Houwing’s explanation that Ochkit’s share of this bill was not paid because it was not Macrossan & Amiet’s client. [60] Obviously the direct obligation to pay the invoiced fees lay with the solicitor’s client, Dreamtea. However, as Mrs Houwing accepted, Macrossan & Amiet’s invoiced work was essential for the project.96 Unless Ochkit no longer remained obliged to contribute 5/9ths of the project costs it was obliged to pay its share of the amount of this invoice, whether to Dreamtea or, for convenience, directly to Macrossan & Amiet. A delay of six months in making such payment was unreasonable. [61] When asked if she accepted they were liable for their share of the cost of Macrossan & Amiet’s services Mrs Houwing replied: “We were wanting to talk to George [Klenowski] about all these things, which is why the delay. I needed to talk to the man and I said I wasn’t – I had no obligation. He said that there was not to be anything else done 93 Ex 1 p252. 94 T2-53 L35. 95 T2-17 L20. 96 T2-54 L12. -- 20 of 61 -- 21 until it was in writing with everybody and he just was doing what George always does, which is do what he wants.”97 [62] That answer’s reference to obligation and Mr Klenowski saying there was not to be anything else done appears to a reference to his memorandum of 3 February 2009. But that memorandum related to pre-approval of any future work by AMEC and Access Secretarial, not work by Macrossan & Amiet. As already mentioned, it is likely Mr Klenowski’s phone call of 22 October 2008, his memorandum and his avoidance of Mrs Houwing’s repeated attempt to contact him caused the Houwings to reason they should hold off making payments and advancing the project until Mr Klenowski would resume speaking with them. However, such brinkmanship ignored the reality that third parties such as Macrossan & Amiet were entitled to be paid. [63] While all of these considerations point to this component of the nominal damages claim having substance it remains unclear on the evidence how the delay in paying Macrossan & Amiet’s invoice caused actionable harm to Dreamtea. There is no evidence the payment of 26 August 2009 was to Dreamtea or, even if it was, that Dreamtea had earlier paid the outstanding amount to Macrossan & Amiet, such that Dreamtea rather than Macrossan & Amiet was the party injured by the ensuing delay in payment. It follows this component of the claim is unsustainable. Invoice 08/031 from AMEC [64] Construction for the development was completed around December 2008 but during the next year the owners were obliged to maintain those parts of it, such as trees and other vegetation on verges, which a local council would typically maintain, pending the Council’s satisfaction any defects were rectified.98 Invoice 08/031 was for such maintenance during this “on maintenance” period. The invoice, dated 15 June 2009, was emailed, along with other overdue invoices, to the Houwings and their secretary on 19 June 2009.99 97 T2-53 L46 – T2-54 L3. 98 T1-23 LL35-45, Ex 1 pp367, 368. 99 Ex 1 p194, T1-23 L31 – T1-24 L8. -- 21 of 61 -- 22 [65] Mr Klenowski testified the Houwings 5/9th share of the invoice was not paid by the Houwings or Ochkit and it was paid for by Dreamtea, on 21 August 2014, apparently as a component of a single large transfer of funds to Mistranch to reimburse it for covering for this and other non-payment of invoices by Ochkit.100 [66] This and subsequent invoices from AMEC were issued after Mr Klenowski’s memorandum of 3 February 2009 declaring AMEC and Access Secretarial would only do future work on the joint request of the Houwings, Dreamtea and Access Secretarial. Mr Klenowski seemed to assert during cross-examination there had been joint requests to AMEC101 saying they took the form of “off maintenance and on maintenance written instructions and telephone calls to the Houwings” in which “they agreed that that work had to be done for the title deeds to be obtained and off maintenance”.102 On the other hand this phase of cross-examination culminated in him being asked if he ever rang the Houwings before the work was done to ask if it was okay to do the work to which he responded, “Throughout the whole project that was never necessary”.103 This passage of cross-examination involved a pattern, often repeated during Mr Klenowski’s cross-examination, of him obviously avoiding giving direct answers to questions. [67] Mrs Houwing testified there was no agreement between the parties regarding AMEC’s performance of this work.104 She accepted that the type of work contemplated by the invoice was necessary during the on-maintenance period and asserted it was the type of work she performed when she attended the site, though she did not invoice for it.105 It is noteworthy that even Mr Klenowski in writing to the Houwings on 21 April 2009, on AMEC letterhead, said he was “continuing to maintain the landscaping… at no cost to the developers”.106 (emphasis added) 100 T1-24 LL19-27, Ex 1 p198, T2-37 LL5-20. 101 T1-63 L44. 102 T1-64 L15. 103 T1-65 L25. 104 T2-62 L2. 105 T2-61 L43 – T2-62 L15. 106 Ex 2. -- 22 of 61 -- 23 [68] Dreamtea’s entitlement to this component of its claim turns upon the non-payment being a breach of contract, a topic discussed further below. As to the alternative restitutionary pathway, that alternative can be dispensed with forthwith. [69] Setting aside the invoiced work having been performed pursuant to the written agreement and thus the failure to pay being a breach of contract, the evidence shows no legal or moral compulsion on Dreamtea in connection with this invoice. There was no basis, beyond any contractual obligation flowing from the written agreement, for Dreamtea to arrange AMEC to perform this work in part on behalf of Ochkit. To the contrary, Dreamtea’s representative Mr Klenowski had announced such work would not occur absent prior agreement and there was no such prior agreement. Moreover, consistently with that position, he announced his continuation of landscaping maintenance would not be at any cost to the developers. The Houwings, who also tended to such maintenance, did not look to reimbursement for such work either. Performing such work, whether in person or by engaging and paying another to do it, was an incident of ownership. It is a stretch to infer from its mere performance that it ought create an obligation on the part of a fellow owner to pay for it but in any event Mr Klenowski’s announcements eliminated such an inference. The alternative restitutionary foundation for liability must therefore fail. Invoice 09/025 from AMEC [70] Invoice 09/025 from AMEC was for off maintenance remedial works by Mr Klenowski as well as by mowing and paving businesses, organised by Mr Klenowski. The invoice was forwarded to the Houwings’ secretary by Mr Klenowski’s secretary by email on 8 December 2009, the date of the invoice.107 Mr Klenowski testified the Houwings did not pay their share of the invoice and it was eventually paid by Dreamtea in its own right,108 on 21 August 2014, apparently as a component of a single large transfer of funds to Mistranch to reimburse it for covering for this and other non-payment of invoices by Ochkit.109 107 Ex 1 pp180-183, T1-24 L47. 108 T1-25 L9. 109 Ex 1 p198, T2-37 LL5-20. -- 23 of 61 -- 24 [71] When asked to accept the invoiced work was necessary during the on-maintenance period Mrs Houwing said she did not know and that she had not approved the work110 – an obvious reference to the requirement of advance mutual agreement in Mr Klenowski’s memorandum. [72] Dreamtea’s entitlement to this component of its claim turns upon the non-payment being a breach of contract, a topic discussed further below. The alternative restitutionary basis of this component of the claim must fail for the same reasons given in respect of invoice 08/031. Invoice 09030 from Access Secretarial & Project Support [73] Invoice 09030, dated 8 December 2009, was for work performed by Mr Klenowski’s secretary, Ms Wright, in organising maintenance work and documents in preparation for the off maintenance inspection by Council.111 Mr Klenowski testified the invoice was sent to the Houwings by email, they did not pay their share of it and that amount was ultimately paid by Dreamtea.112 An internet banking transfer record shows Dreamtea paid such an amount to Access Secretarial on 21 August 2014. [74] This invoice was issued nine months after Mr Klenowski’s memorandum of 3 February 2009 declaring AMEC and Access Secretarial would only do future work on the joint request of the Houwings, Dreamtea and Access Secretarial. Mrs Houwing testified113 and Mr Klenowski accepted in cross-examination that the Houwings did not request Access Secretarial to perform the work.114 [75] Dreamtea’s entitlement to this component of its claim turns upon the non-payment being a breach of contract, a topic discussed further below. The alternative restitutionary basis of this component of the claim must fail for the same reasons given in respect of invoice 08/031. It is true the work here went beyond organising maintenance but the other work described in the invoice, like the maintenance work, was not of such a scale or nature as to compel an inference that if commissioned by 110 T2-62 L25. 111 T1-25 L16. 112 T1-25 LL18-31. 113 T2-62 L44. 114 T1-65 L45. -- 24 of 61 -- 25 one owner the other owner ought contribute to its cost. That is particularly so in circumstances where it was indicated in effect that such an obligation would not arise without agreement in advance. Invoice 16001 from Macrossan & Amiet [76] Mr Klenowski testified Macrossan & Amiet’s invoice 16001 was sent to the Houwings by an email115 from Macrossan & Amiet to the Houwings’ solicitors, Condon Charles Lawyers, but Ochkit’s 5/9th share of it was paid by Dreamtea.116 [77] The invoice was for disbursements for registration and requisition fees and sealing of the plan. These disbursements were obviously necessary costs of the project and Mrs Houwing did not suggest otherwise.117 Ochkit has not paid Dreamtea its share of this invoice. When asked why it had not been paid Mrs Houwing speculated she may have overlooked it because of the distraction of nursing her dying mother for a prolonged period.118 [78] Dreamtea’s entitlement to this component of its claim appears unassailable. Whether the non-payment is a breach of contract is discussed further below. However, the alternative restitutionary basis of this component of the claim can be upheld forthwith. The disbursements in question were essential expenditures required for the mutual benefit of the owners. The inference that an owner would be unjustly enriched without making a proportionate contribution to the cost of such disbursements is compelling. Moreover, there is no suggestion of any announcement of the kind Mr Klenowski made about AMEC and Access Secretarial countering such an inference. Dreamtea’s claim for this sum should succeed. Invoice 16217 from Macrossan & Amiet [79] Mr Klenowski testified Macrossan & Amiet’s invoice 16217 of 15 December 2009, relating to additional covenants required by Council, was forwarded by email by his 115 Ex 1 p171. 116 T1-19 LL1-30. 117 T2-57 L6. 118 T2-56 L46. -- 25 of 61 -- 26 secretary to the Houwings.119 The exhibited invoice did not contain the schedule to which it referred but Mr Klenowski said he presumed the schedule would have been sent.120 A copy thereof was tendered through him in re-examination.121 Mr Klenowski testified Ochkit’s 5/9th share of that invoice was paid by Dreamtea in its own right because the Houwings refused to pay.122 [80] Mrs Houwing accepted the schedule to the invoice involved work required to have the survey plan registered so that the titles to the nine project lots could issue.123 Indeed perusal of the schedule shows it includes repeated communications with the Houwings and their solicitor during the era when the Houwings were delaying in executing and returning the documents required for title registration, as discussed below. [81] Dreamtea’s entitlement to this component of its claim also appears unassailable. Whether the non-payment is a breach of contract is discussed further below. However, the alternative restitutionary basis of this component of the claim can be upheld forthwith for the same reasons given in respect of invoice 16001. This invoice was for professional work rather than disbursements but it was no less essential or mutually beneficial. The Houwings may have, as earlier discussed, been engaging in delay during the era when the work was performed but there was never any indication by them that the development should not proceed to completion and this work was essential to that end. Dreamtea’s claim for this sum should succeed. Invoice 1180 from G M Novikov [82] To transition from the developers to Council being responsible for maintenance it was necessary for Mr Novikov, the project engineer, to carry out an inspection and “sign off”.124 That exercise resulted in his invoice 1180 of 1 December 2009. The necessary performance of this work and its cost was notified in advance by a letter 119 T1-18 LL1-19. 120 T1-73 L21. 121 Ex 13. 122 T1-18 L31. 123 T2-58 L2. 124 T1-19 LL34-47. -- 26 of 61 -- 27 dated 2 November 2009 from Macrossan & Amiet to Condon Charles Lawyers.125 That letter requested the Houwings pay their share of that cost, and other costs mentioned in the letter as essential to going “off maintenance”, to their trust account by 11 November 2009. That apparently did not occur. [83] Mr Klenowski testified invoice 1180 was sent to the Houwings but they did not pay the 5/9th share and it was paid by Dreamtea in its own right,126 on 21 August 2014, apparently as a component of a single large transfer of funds to Mistranch to reimburse it for covering for this and other non-payment of invoices by Ochkit.127 [84] Mrs Houwing accepted Ochkit has not paid 5/9ths of the amount of the invoice.128 It is obvious that without the performance of the work invoiced the development would have remained on maintenance to the financial detriment of all parties to the project and leaving the project incomplete. The cost of the work invoiced was necessarily incurred as a cost of the development project. [85] Dreamtea’s entitlement to this component of its claim also appears unassailable. Whether the non-payment is a breach of contract is discussed further below. However, the alternative restitutionary basis of this component of the claim can be upheld forthwith for the same reasons given in respect of invoice 16001 and 16217. Dreamtea’s claim for this sum should succeed. Invoice issues remaining [86] The above analysis has these consequences: (a) in respect of invoices 08/010, 08/016, 08/019 the claim to nominal damages has substance but it remains to finally determine the claim; (b) in respect of invoices 8327 and 6077 there is no sustainable claim; 125 Ex 1 p329. 126 T1-20 L5, T1-22 L19. 127 Ex 1 p198, T2-37 LL5-20, Ex 20. 128 T2-61 L18. -- 27 of 61 -- 28 (c) in respect of invoices 1086, 16001, 16217 and 1180 there is a sustainable restitutionary claim to contribution or restitution and it remains to consider whether there is a contractual pathway to liability; (d) in respect of invoices 08/031, 09/025 and 09030 it remains to consider whether there is a contractual pathway to liability but there is not otherwise a sustainable restitutionary claim. Nominal damages claim (invoices 08/010, 08/016, 08/019) [87] I have already concluded Ochkit delayed for unreasonably long periods in paying its proportionate share amounts of each of invoices 08/010, 08/016, 08/019. [88] The only remaining obstacle to liability raised by the defendants is the argument there was no requirement under the written agreement that such amounts be paid within a reasonable time or any timeframe at all. There is no substance to that argument. [89] The inference that Ochkit had an obligation to meet its financial obligations under the agreement in a timely way arises in a variety of ways from the content of the agreement. It is sufficient to identify one such way. Clause 2.4 of the agreement obliged Ochkit and Dreamtea to bear all future costs, in 5/9th and 4/9 shares respectively. Clause 5.1(b) of the agreement required each party to: “Co-operate with the other parties and ensure the prompt and efficient discharge of its obligation under this Agreement.” (emphasis added) It follows Ochkit’s obligation to pay its proportionate share of the subject invoices was required to be discharged promptly. That did not occur. [90] It is not disputed such a breach of contract without proof of loss entitles a plaintiff to nominal damages.129 The plaintiff cannot point to any loss and only seeks nominal damages. I assess nominal damages payable by Ochkit at $30. 129 Luna Park (NSW) Ltd Tramways Advertising Pty Ltd (1938) 61 CLR 286. -- 28 of 61 -- 29 Contractual pathway to liability (sole basis: invoices 08/031, 09/025, 09030; alternative basis: invoices 1086, 16001, 16217 and 1180) [91] The defendants seek to avoid liability for the alleged breach of the written agreement by non-payment of the proportionate shares of the above invoices on a number of grounds. [92] Firstly, it is alleged the agreement is not enforceable because Dreamtea was not the owner of the Dreamtea land as represented to the defendants and warranted in the agreement, because it was only the half owner and the other owner was the Klenowski Superannuation Fund. The latter proposition is plainly wrong – the superannuation fund was not of itself an owner. Dreamtea owned the Dreamtea land half in its own right and half as trustee for the Klenowski Superannuation Fund. I have already found the defendants knew prior to entering into the agreement that Dreamtea owned the land in that dual capacity. Further, nothing represented by Dreamtea in the agreement’s content is inconsistent with that state of dual ownership, for either way the owner at law was Dreamtea. [93] Secondly, it is alleged Dreamtea did not have the authority under the superannuation fund trust deed to enter into the agreement, apparently because it involved conducting a business contrary to s 62 Superannuation Industry (Supervision) Act 1993. The trustees’ broad powers under the trust deed prima facie empowered it to enter into such an agreement.130 It is not apparent that involvement in the development amounted to conducting a business. In any event s 62 is concerned with the trustee’s obligation to ensure the fund is maintained solely for the provision of member’s benefits and there is no suggestion the agreement had a tendency other than to improve the value of the existing half interest and thus enhance the member’s benefit. [94] Thirdly, it is alleged the plaintiff repudiated the agreement by refusing to supervise the project and abandoning it, leaving the defendants to attend to completion. This appears to be a reference to the events of 22 October 2008 and the period soon thereafter. While Mr Klenowski appears to have ventilated frustration and apparently been away at Moranbah for some time in this era the evidence does not suggest that 130 Ex 1 pp57-102 - for example: [3.3], [3.4], [3.6], [6.1.5], [6.1.9], [6.2]. -- 29 of 61 -- 30 Dreamtea, which used entities and personnel other than Mr Klenowski, ceased its role in progressing the development or evinced an intention no longer to be bound by the contract. It will be recalled for example that Ms Wright continued to co- ordinate work at times while Mr Klenowski was away. Moreover, invoices 08/016 and 08/019 record that Mr Klenowski did continue some development related activity during this era. I do not accept there was a repudiation. Moreover, there was no exercise by the Houwings or Ochkit of an election to accept the supposed repudiation and terminate as there would need to have been to bring the contract to an end.131 The defendants certainly engaged in delaying behaviour through 2009 but they were using that tactic as leverage to communicate with Mr Klenowski, not because they were treating the contract as terminated. Indeed, they treated the contract as continuing even when the invoice disputes of 2009 became serious. [95] For example, on 26 June 2009 Macrossan & Amiet wrote to the Houwings noting inter alia that payment was outstanding of $5,165.56 for Macrossan & Amiet’s invoice, $8,137.80 for Dowdens Pumping’s invoice and $8,649.32 for AMEC’s invoices.132 The letter noted Dreamtea would have no choice but to commence court proceedings if the Houwings did not meet their financial obligations. A winding up application was eventually filed against Ochkit, but by Mistranch, not Dreamtea. By letter of 27 August 2009 Ochkit and the Houwings’ solicitors wrote to Macrossan & Amiet pointing out the agreement of 17 July 2007 was between Ochkit, the Houwings and Dreamtea so that the proper applicant for any winding up proceeding ought be Dreamtea.133 Such reliance on the agreement is inconsistent with them regarding it as having been repudiated. [96] Fourthly, it is alleged the plaintiff is precluded or estopped from acting on the non- payments as alleged breaches because the plaintiff did not issue a default notice pursuant to clause 3.2 of the agreement. That clause provides a party “may” serve a notice of default requiring the default to be remedied. Failure to remedy after the notice gives rise an unremedied default. If that occurs then the aggrieved party is entitled pursuant to clause 4 to require a transfer of the other party’s security lot and 131 Holland v Wiltshire (1954) 90 CLR 409. 132 Ex 1 p254. 133 Ex 1 p390. -- 30 of 61 -- 31 to assume liability for the total amount of the project finance. Thus, it can be seen clause 3.2 is a facilitative provision, triggering potentially significant liability, extending beyond the mere quantum of loss associated with the breach giving rise to the notice of default. It does not preclude the pursuit of ordinary contractual remedies for breach of contract. [97] Fifthly, it is alleged the plaintiff is precluded from relief because it is not the assignee of any of the alleged debts and thus lacks standing to seek payment. I have earlier identified some invoices where the debt claimed is not owing to the plaintiff. However, in respect of the present invoices they were paid by Dreamtea which in turn seeks Ochkit’s 5/9th share of the cost incurred by Dreamtea. In the normal course, such payments can likely be categorised as payments by one of two joint debtors so that the first debtor is entitled to recover a contribution from the second.134 In any event though it is clear from the agreement that Ochkit had an obligation to pay 5/9ths of the project costs. It follows Dreamtea as project supervisor, having tended to the payment of project costs to entities engaged by it, is implicitly entitled under the contract to payment to it by Ochkit of 5/9ths of those payments of project costs. [98] Sixthly, it is alleged the parties agreed on 3 February 2009 not to engage in any further work on the project unless requested by all parties to the agreement. Mr Klenowski’s memorandum of 3 February 2009 involved no agreement between the parties. Nor did it relate to all future work, only future work by AMEC and Access Secretarial. It was however an indication in the course of the project by the representative of Dreamtea, which was the project supervisor, that AMEC and Access Secretarial were no longer to be used in incurring project costs without joint agreement in advance. [99] Its effect was similar to clause 5.2(f) of the agreement which provided a party would not without the prior written consent of the other party incur any monetary or other obligations on behalf of the other parties. It is apparent from the structure and context of the agreement that clause 5.2(f) did not relate to project costs incurred in 134 See for example Bartels v Behm (1990) 19 NSWLR 257, 260. -- 31 of 61 -- 32 the ordinary course by the project supervisor. Project costs were those costs associated with creating the allotments with all services and infrastructure installed and separately titled in a state to be transferred to third parties.135 That is the very work the supervisor was tasked to perform by clause 2.2 of the agreement. [100] The memorandum of 3 February 2009 did not of itself alter the written agreement and was not an “agreement” as the defendants allege. But that is not the end of its significance. It was an unambiguous indication by the project supervisor, never varied or retracted, of how AMEC and Access Secretarial would be used in the future. It had the consequence of indicating as a simple matter of fact that without advance joint agreement any future work by AMEC and Access Secretarial would not be treated as work commissioned by the project supervisor giving rise to project costs for the purposes of the agreement. While the point was not specifically argued, I would not be prepared to accept that Dreamtea’s subsequent sending to Ochkit of invoices from AMEC and Access Secretarial had the effect of retracting or varying the indication of future arrangements given on 3 February. If there were to have been a retraction or variation it would logically have occurred before the procuring of the work and not after the event. If follows I do not accept of AMEC and Access Secretarial invoices 08/031, 09/025 and 09030 that any proportion of their amount is payable by the defendants. [101] The same does not apply to invoices 1086, 16001, 16217 and 1180 for they relate to work by entities, not referred to in the memorandum of 3 February. I have also upheld of those same invoices the plaintiff is entitled to damages for the relevant proportionate amount of those invoices Orders [102] I will order a judgment amount of $2,865.70 damages reflecting a total assessment of: (a) nominal damages in the amount of $30 (relating to invoices 08/010, 08/016 and 08/019); 135 Ex 1 pp4,5. -- 32 of 61 -- 33 (b) compensatory damages in the amount of $2,835.70 (relating to invoices 1086, 16001, 16217 and 1180, namely $366.67 + $448.58 + $1,348.23 + $672.22). [103] I will hear the parties as to the calculation of interest thereon and as to whether in light of my reasons the damages are payable by both defendants or only the first defendant. The loss of use of monies claim The delay [104] A threshold premise of the loss of use of monies claim as well as the forced sale claim is that the Houwings long delayed in completing transfer and other documents required to bring the development’s new lots into lawful existence. The extent of the Houwings’ delay in doing so was well illustrated by correspondence tendered at trial. [105] On 23 February 2009 Macrossan & Amiet wrote to the Houwings informing them Council had sealed the survey plan and associated documents and enclosing the survey plan and documents relating to three easements and five covenants for execution.136 The letter explained Macrossan & Amiet would attend to registration after the return of the documents fully executed by the Houwings. The following day, 24 February 2009, Macrossan & Amiet wrote to the Houwings saying they had forwarded by post the original plan, covenants and easements which the Houwings were required to sign and return to Macrossan & Amiet for registration.137 This letter also enclosed two transfer documents to resolve ownership of lots seven and eight and asked the Houwings to execute and return those documents as well. [106] The Houwings did not do as requested. On 6 March 2009 Macrossan & Amiet emailed the Houwings referring to the letters of 23 and 24 February and asking whether the Houwings had signed the documents and when their return could be expected.138 136 Ex 1 p199. 137 Ex 1 pp236, 237. 138 Ex 1 p250. -- 33 of 61 -- 34 [107] On 1 April 2009, in an email to the Houwings, Macrossan & Amiet again enquired when they could expect to receive the signed plan, transfers, covenants and easements forwarded to the Houwings for signature in February. [108] On 29 May 2009 Macrossan & Amiet again wrote to the Houwings noting the documents still had not been returned.139 The letter pointed out Council sealed the survey plan on 18 February 2009 and if it was not lodged for registration within six months thereof there would be additional Council and legal costs required for resealing the plan and extending the currency of the development approval. [109] On 26 June 2009 Macrossan & Amiet wrote to the Houwings noting their failure to execute and return the documents despite repeated follow up.140 The letter asserted the conduct was a breach of the agreement’s duty to co-operate clause and amounted to a repudiation of the agreement, in respect of which Dreamtea reserved its rights. The letter foreshadowed the commencement of court proceedings against the Houwings if they failed to sign the documents and foreshadowed a damages claim if Dreamtea suffered loss because of the Houwings’ breach. More specifically the letter noted the delay was hindering Dreamtea’s attempts to sell its lots, to be created by registration of the survey plan, and warned of a potential damages claim if Dreamtea lost an opportunity to sell one of its lots. [110] By 19 August 2009 it is apparent from tendered correspondence that the parties’ lawyers were corresponding about the impasse. It appears that by this time Dreamtea had placed a caveat over the Houwing land and the Houwings’ solicitor, presumably concerned about Dreamtea’s attitude because of the Houwings’ delay, was seeking assurances about the caveat’s removal and Dreamtea’s continued co-operation to effect registration and creation of the individual lots.141 [111] In a letter dated 20 October 2009, the Houwings’ solicitors Condon Charles Lawyers advised Macrossan & Amiet the transfer documents had been returned and should be received later in the week.142 139 Ex 1 p252. 140 Ex 1 pp253-255. 141 Ex 1 p256. 142 Ex 1 p269. -- 34 of 61 -- 35 [112] In the upshot, the plan was finally registered on about 30 November 2009 thus giving rise to the nine separate lots.143 Had the Houwings not delayed in executing and returning the documents it is obvious their registration and the legal creation of the nine separate lots would have occurred months earlier, probably by about March 2009. [113] Mrs Houwing’s explanation for the long delay in executing and returning the documents was that she wanted to talk to Mr Klenowski about risk issues in respect of a retaining wall at the development and he would not talk with her.144 I accept that Mr Klenowski’s refusal to talk with the Houwings was a reason for their inaction but reject Mrs Houwing’s more specific evidence about a retaining wall risk being influential in her reasons. If it was a genuine concern it would have been raised in the communications between the parties’ solicitors which occurred before the documents were finally executed and returned and no evidence of it being so raised was forthcoming. [114] Another reason put to Mrs Houwing for the Houwings prolonged inaction was that they did not want registration to occur because they would then have to pay higher rates overall to Council as they had not arranged buyers for the lots. In compellingly rejecting that theory Mrs Houwing pointed out the rates payment for their five lots is still paid by them presently and pales into insignificance against their much more substantial rates obligations arising from their other properties.145 [115] In the upshot though it is unnecessary to conclude precisely what motivated the Houwings’ delay in executing and returning the documents. The delay was unquestionably unreasonable and entirely their fault. As I have found, their extraordinary delay resulted in the lots only being registered on 30 November when in the normal course they would have been registered in March. It was a clear breach of their obligations under the agreement, particularly the duty to co-operate clause as well as clause 5.1(b). The real issue is whether the plaintiff has proved the delay was causative of loss. 143 T1-29 L13, eg Ex 1 p340. 144 T3-5 LL22-45. 145 T3-6 L32. -- 35 of 61 -- 36 [116] This conclusion of breach makes it unnecessary to consider the plaintiff’s pursuit in the alternative of equitable compensation for the alleged breach of fiduciary duty by delay, particularly given the actual relief sought is no different. Conditional sale of lot 6 [117] On 6 March 2008, almost a year before the Houwings were asked to sign the documents, Dreamtea contracted to sell lot 6 to Dreamtea as trustee for the Klenowski Superannution Fund for $150,000.146 Mr Klenowski testified that price was recommended by real estate agent Greg Chappell.147 No documents about the agent’s valuation of Dreamtea’s lots were disclosed by Dreamtea.148 The lot was sold for a significantly higher price of $247,000 on 27 August 2010.149 [118] The deposit amount in the contract was endorsed with the amount of $90,000 payable when the contract was signed. Nearby, the contract has been endorsed by hand, “$40000 on 6/3/08”, “$50000 on 28/3/08” and “$15,000 on 2/2/09”. Similar handwritten endorsements appear at the top of page one of the contract with an abbreviation for “paid” written against each. Mr Klenowski testified each of these entries represent payments made on those respective dates as deposits for the purchase.150 [119] The first two of those payments were made long before the delay in document execution during 2009. The making of the third payment on 2 February 2009 of $15,000 was evidenced by the exhibiting of a bank statement extract and an invoice of that date in an amount from Dreamtea to the Klenowski Superannuation Fund for an “additional deposit on lot 6”.151 Mr Klenowski testified it was made because Dreamtea was in financial difficulty and required money.152 However, that payment also occurred before the Houwings were first asked to execute the documents in late February 2009. 146 Ex 1 pp350, 351. 147 T1-31 L23. 148 T1-78 L32. 149 T1-78 L10. 150 T1-31 LL30-46. 151 Ex 1 pp357, 358. 152 T1-32 L2. -- 36 of 61 -- 37 [120] Mr Klenowski testified a further deposit was paid from his superannuation fund’s account on 25 June 2009. This payment of $30,000 was verified by an exhibited extract of the fund’s bank statements.153 Its status as a deposit was evidenced by an exhibited invoice from Dreamtea to the Klenowski Superannuation Fund, with the amount being described in the invoice as an “additional deposit on lot 6”.154 Mr Klenowski testified the reason for the deposit was that “at that stage, Dreamtea was in financial difficulty because the Houwings refused to sign the title deeds, and the tranactions couldn’t occur”.155 [121] These total deposits of $135,000 left a balance owing on completion of $15,000 which was paid as part of a single payment for the balances owing on lots 6 and 8 on 14 December 2009.156 Conditional sale of lot 8 [122] On 18 February 2009 Dreamtea contracted to sell lot 8 to Dreamtea as Trustee for the Klenowski Superannuation Fund for $342,500.157 Mr Klenowski testified that purchase price was recommended by real estate agent Greg Chappell.158 The lot was later sold, on 10 February 2012, for $390,000.159 The $342,500 contract price appears to have been the price for the entirety of the lot, notwithstanding Dreamtea, as trustee, had already become owner of half the interest in the Dreamtea land back in 2006. A sole special condition, not present in the contract for lot 6, was that the contract was “subject to obtaining the title deed”. [123] The contract contained no entry against the deposit amount. The tendered copy of it contains a handwritten endorsement at the top of its first page, “Dep $100000 15/10/09”. The making of that payment on 15 October 2009 was confirmed in evidence by a tendered extract of Mr Klenowski’s superannution fund’s bank statements and a tendered invoice of that date from Dreamtea to the Klenowski 153 Ex 1 p359. 154 Ex 1 p360. 155 T1-32 L36. 156 Ex 1 p363, T1-32 L43. 157 Ex 1 pp348-349. 158 T1-30 L4. 159 T1-78 L16. -- 37 of 61 -- 38 Superannuation Fund for a deposit on lot 8 of $100,000.160 Mr Klenowski testified that because Dreamtea was in financial difficulty as a result of the Houwings’ refusal to sign the documents necessary to create title it was necessary for a deposit to be paid from the superannuation fund to Dreamtea.161 Implicit in this testimony is the unorthodox notion that as deposit holder Dreamtea applied the deposits to its own use prior to completion. As much was obvious anyway from the fact of the paying of deposits which were obviously not intended to sit idle or needed to secure the buyer’s completion. [124] This left a balance owing on completion of $242,500 which was paid as part of a single payment for the balances owing on lots 6 and 8 on 14 December 2009.162 The claim [125] The plaintiff claims $18,131.35 consisting of: (a) loss of use of monies from the delayed sale of lot 6 for the balance sale price of $15,000 in the sum of $1,056.27; (b) loss of use of monies from the delayed sale of lot 8 for the balance sale price of $242,500 in the sum of $17,075.08. [126] On Mr Klenowski’s account, but for the delay Dreamtea would have used the settlement monies from the sale of the lots to reduce its loan debt to Wide Bay Australia.163 That loan, discussed further below, had partly funded Dreamtea’s acquisition of a unit in Miskin St, Toowong. [127] The plaintiff reasons that applying the 6.15% compound interest then being paid on the Wide Bay Australia loan to the total balance sale price for lots 6 and 8 gives rise to an amount of $11,394.43 or, applying simple interest between 7% and 10% per annum, gives rise to $12,691.57 to $18,130.82.164 160 Ex 1 pp361, 362, T1-30 L19. 161 T1-30 L11. 162 Ex 1 p364, T1-33 L4. 163 T1-74 L35. 164 Plaintiff’s written submissions [90]. -- 38 of 61 -- 39 [128] It may readily be accepted that, as the plaintiff submits, the purpose of the development contract was to create residential lots of land ready for sale so that a loss flowing from the lots not being ready for sale as a result of a breach of the contract would satisfy the remoteness test of the first limb in Hadley v Baxendale.165 However, this component of the claim is not helped by the absence of any evidence as could inform my own assessment of the probability that the lots would have been sold sooner had there been no delay. Similarly, there is no evidence from a valuer as to what the lots’ market value would have been. [129] More determinative is my view of what Mr Klenowski would have done had the balance of the sale monies been available earlier. It will become apparent from the discussion of Mr Klenowski’s evidence in respect of the forced sale claim below that he was not particularly forthcoming with testable evidence about his and Dreamtea’s obviously interrelated financial affairs. Nonetheless, despite his evidentiary obscurity about finances, such evidence as there is on the present issue demonstrates he would not have applied the settlement monies to reduce Dreamtea’s loan debt. It will be recalled a total of $235,000 had already been raised by the various deposits paid from Mr Klenowski’s superannuation fund to Dreamtea, yet none of that money was applied to repayment of Dreamtea’s loan from Wide Bay Australia. That conduct, during the very era when it is suggested the sale proceeds would have been applied to reduce Dreamtea’s loan, shows such proceeds would not have been so applied. [130] The component of the claim seeking damages for loss of use of monies must therefore fail. The forced sale claim The Miskin St unit [131] The above-discussed delay in registration caused by the delay in the Houwings executing and returning the documents allegedly also had the consequence that Dreamtea had to sell its residential unit at Miskin St in Toowong. 165 (1854) 9 Exch 341; 156 ER 145. -- 39 of 61 -- 40 [132] Mr Klenowski testified Dreamtea had purchased the unit in 2007166 for him to obtain rent to support him in retirement167 and have the option “in the distant future” of selling it at a profit.168 Mr Klenowski testified that during 2008 to 2009 it was tenanted to his son who was paying $500 rent per week.169 No documentary evidence of the tenancy or the rental payments was produced at trial. [133] A line of equity (“the loan”) for the unit’s purchase, of about $300,000, was provided on 4 December 2007 by Mackay Permanent Building Society.170 During the life of the loan, seemingly from 31 May 2008, that financial institution became Wide Bay Australia Ltd.171 [134] Mr Klenowski did not know whether Dreamtea claimed a tax deduction for interest on that loan and even testified he did not know if the property was negatively geared.172 The sale of the unit [135] Mr Klenowski testified that on the advice of the real estate agent he engaged to sell the property he had his tenant vacate the unit in June 2009 to make it easier to sell.173 [136] The property was sold for $635,000, pursuant to a contract entered into on 25 November 2009, with settlement occurring on 17 December 2009.174 [137] The unit had been valued by David Mapleston of Heron Todd White on 19 October 2017 at $625,000.175 A Heron Todd White valuation report by Steven Otto of 29 July 2005 valued the unit at $670,000.176 A further report by Steven Otto of 24 166 T1-43 L45. 167 T1-33 L44. 168 T1-34 L7. 169 T1-34 L3. 170 Ex 1 p271. 171 Ex 1 p276 (this account statement is in the name of Dreamtea as trustee for the Klenowski superannuation fund but that was said to be an error, later corrected by Wide Bay Australia – T1-34 L36). 172 T1-75 LL12-20. 173 T1-38 L37, T1-88 L5. 174 T1-38 L45, T1-39 L29, Ex 1 pp297-301. 175 Ex 15. 176 Ex 16. -- 40 of 61 -- 41 February 2016 also valued the property’s market value as $670,000.177 Mr Otto did not ascertain what renovations to the property had occurred between December 2009 and February 2016,178 although he did not notice evidence of renovation or variations to the original fittings and fixtures.179 [138] Mr Otto opined the market rental income that could have been derived from the property between 1 October 2009 and 31 December 2009 was $6,890.180 The Claim [139] The SOC pleads that by reason of the delay caused by the Houwings’ refusal to sign the documentation to enable the subdivision to proceed Dreamtea was unable to service other loans and was thereby required to sell the Miskin St unit.181 It pleads as a particular of that allegation that Dreamtea was reliant on the proceeds of sale of land subdivided under the agreement to repay the loan taken out to purchase the unit.182 It pleads but for the delay Dreamtea would not have sold the unit and it incurred losses, costs and expenses totalling $77,234.75 as a result of the necessity to sell.183 That total, claimed by Dreamtea, was pleaded as consisting of $17,957.50 agent’s commission, $11,777.25 advertising and removal expenses, loss of 25 weeks rental income of $12,500 while marketing the property for sale and loss of opportunity to make a capital gain of $35,000. Causation [140] The chain of causation on which this feature of the claim relies is that Dreamtea had to sell the Miskin St unit because it could not repay the loan because it lacked the funds to do so because it was reliant for such funds on the sale of lots in the subdivision, which sales were delayed because of the Houwings’ delay during 2009 177 Ex 1 pp376. 178 T2-23 L27. 179 T2-31 L20. 180 Ex 1 p375. 181 SOC [10A]. 182 SOC [10A(a)]. 183 SOC [10B]. -- 41 of 61 -- 42 in executing and returning the documents. Such evidence as was led in purported proof of this causative foundation was scant and unconvincing. [141] It is not possible to analyse the multitudinous difficulties attending this aspect of the case in an integrated way. The better course is to just list the litany of problems, the cumulative effect of which will demonstrate why the plaintiff has failed to prove this component of the claim. [142] When asked in evidence in chief why the property was sold Mr Klenowski responded: “Because the combined debt of Dreamtea and G Klenowski at that time with Wide Bay was $600,000, and that was unacceptable to Wide Bay, and they recommended that I sell Miskin St.”184 [143] Similarly, in cross-examination Mr Klenowski testified his decision to sell was made in June 2009 when Wide Bay Australia asked him to sell the unit after the combined debts of Mr Klenowski and Dreamtea had escalated.185 However, he went on to give a second reason, explaining Wide Bay Australia requested Dreamtea to sell the Miskin St unit. He explained, as he “understood” it, Wide Bay Australia, unlike Mackay Permanent, did not do commercial loans and “were very reluctant for the Miskin St deal to occur because it was a commercial loan”.186 He seemed to retreat from reliance upon this second reason in cross-examination when it was pointed out Wide Bay Australia had been in the position of lender since May 2008, long before the request to sell was allegedly made in June 2009.187 However, his variability about this reason undermines his reliability on the causation issue. It also underscores the absence of direct evidence from the bank as to whether it requested or merely recommended the sale and for what reason. [144] Mr Klenowski testified the request to sell the Miskin St unit was made orally by his bank manager and in writing.188 He no longer had a copy of that document and could not procure one from Wide Bay Australia. A statutory declaration from a Wide Bay 184 Ex 1-35 L35. 185 T1-41 L18 186 T1-37 L34. 187 T1-41 LL14-28. 188 T1-37 L41. -- 42 of 61 -- 43 Australia employee, tendered in evidence, explained the loan was closed on 22 December 2009 and closed loan files from that era had been stored in East Bundaberg and were lost in the Burnett River flood of 29 January 2013.189 Given the proceeding was instituted in 2010 it is unhelpful to the credibility of this aspect of Dreamtea’s claim that it did not procure or keep any documentary evidence about Wide Bay Australia’s recommendation or request that the unit be sold. In the absence of such evidence, Mr Klenowski’s assertion that he sold the Miskin St unit because of the level of indebtedness and Wide Bay Australia’s request to do something about it190 could have been at least partly corroborated by evidence of the “indebtedness” of alleged concern to the bank. On his own testimony, the impetus to sell the Miskin St unit was because of both his and Dreamtea’s debts,191 that is, it was a collective indebtness which was of alleged concern. He explained he owed money to Wide Bay Australia claiming he had gone $300,000 into debt to pay Dreamtea’s interest.192 When asked if it was his financial distress which led to the decision to sell he responded, “It was the bank’s decision, because both debts were in the same bank to a total of $600,000”.193 Despite the clear relevance of Mr Klenowski’s own financial position to the reason for the sale scant documentary evidence about it was adduced. [145] In the course of Mr Klenowski’s evidence in chief his attention was drawn to monthly payments to the credit of Dreamtea’s loan in the amount of $2,500 from 2 March 2009 to 2 December 2009 from an account number ending #282.194 He explained these payments came from one of his accounts because Dreamtea had no income.195 He testified Dreamtea could not have serviced the loan if he had not made those payments because it “had to service a loan as well as paying for the construction project” and other than the Miskin St rental Dreamtea had no income.196 However, the account statements show monthly payments of $2,500 credited to the loan account from account number ending #282 did not just commence on 2 March 2009 and had been made from as early as 2 May 2008.197 This arrangement which Mr 189 T1-37 L48, Ex 3. 190 T1-41 L23. 191 T1-79 L30. 192 T1-79 L24. 193 T1-79 L36. 194 T1-35 LL4-18, Ex 1 pp 283-293. 195 T1-35 L25. 196 T1-35 LL29, 32. 197 Ex 1 pp275-283. -- 43 of 61 -- 44 Klenowski and his company used to service the loan therefore long pre-existed the era during 2009 when the Houwings delayed in executing and returning documents. That is, it was not an arrangement they were only compelled to resort to because of that delay. [146] Further the notion that Dreamtea’s pressing financial difficulties were connected with “paying for the construction project” overlooks Dreamtea’s unexercised right under the written agreement to arrange project finance utilising the security of the Houwing and Dreamtea security lots under the agreement. Had Dreamtea arranged project finance, as clause 2.2 of the written agreement provided it would, it would not have had the financial burden of paying for the construction project as it progressed. [147] It is noteworthy given the alleged financial distress Dreamtea was under that there was never a default in payment of Dreamtea’s loan.198 In fact by mid-2009, when financial distress allegedly occasioned the decision to sell the unit, it had available credit on the loan’s $300,000 line of equity of $7,995.03.199 That credit had increased to $11,896.25 by 28 November 2009.200 [148] Mr Klenowski’s regular payments to Dreamtea’s loan account fortify the impression arising overall from Mr Klenowski’s financial activities that while he, Dreamtea and Dreamtea as trustee for his superannuation fund were separate legal and financial entities, he was quite willing as the controller of all of them to move funds from each of these entities to or for the benefit of the other entities. He apparently regarded and operated each entity’s finances as part of his collective finances. [149] His above discussed use of his superannuation fund to provide multiple deposits on contracts to benefit Dreamtea is another example of this. So too is his use of the rent his son paid on the Miskin St unit – it was not banked directly to the credit of the Dreamtea’s loan account. According to Mr Klenowski it was paid to Mr Klenowski 198 T1-78 L47. 199 Ex 1 p288 200 Ex 1 p292. -- 44 of 61 -- 45 personally, because he was subsidising Dreamtea.201 He was unable to say into what account it was paid.202 [150] Curiously Dreamtea’s trading account for the year ended 30 June 2009 shows rental income of $8,800 for 2009 and $5,600 for 2008.203 Yet on Mr Klenowski’s evidence the annual rent paid by his son would have totalled $26,500. He struggled to explain this anomaly, noting some of the rent would have gone to him depending on what bills were owing.204 [151] The Wide Bay Australia loan account statements showed no apparent rent payments deposited directly to that account and Mr Klenowski accepted there had been no disclosure of any other bank accounts showing such deposits.205 It is difficult to see how Dreamtea could credibly prove its causation argument without presenting, let alone disclosing, such foundational financial information. This is emblematic of the approach taken: advance Mr Klenowski’s vague oral testimony as reliable without advancing the most elementary of supporting documentary evidence. As Dreamtea’s profit and loss statements and balance sheets were to illustrate, such little documentary evidence as did creep in tended to undermine rather than support the case advanced. [152] The fact Mr Klenowski’s son had been paying rent also undermines the credibility of Mr Klenowki’s assertion that Dreamtea had no income, an assertion he also made in testimony in a prior proceeding on 24 November 2015.206 More damaging to the credibility of that assertion was the revelation in cross-examination that according to Dreamtea’s trading account for the year ended 30 June 2009 it received hire income of $80,400 in 2008 and $77,360 in 2009.207 Mr Klenowski speculated some component of those amounts may have been from Dreamtea hiring a vehicle to Mistranch but he could not otherwise remember the income source.208 201 T1-44 L32. 202 T1-80 L21. 203 Ex 4A. 204 T1-44 LL25-47. 205 T2-2 L31. 206 T1-52 LL11-25. 207 Ex 4A. 208 T1-43 LL15-32. -- 45 of 61 -- 46 [153] Dreamtea’s trading statement formed part of a set of statements including a profit and loss statement prepared by Mr Klenowski’s accountant on information he provided.209 The profit and loss statement for the year ended 30 June 2009 recorded Dreamtea had retained profits at the start of the financial year of $62,769, recorded a dividend “provided for or paid” of $31,300 and recorded retained profits for the end of the financial year of $32,523.210 Mr Klenowski accepted the dividend would have been payable to him as the sole shareholder.211 He testified there was no reason to doubt the accuracy of such records.212 They are records which do not rest well with Dreamtea’s financial position supposedly being in dire straits by mid-2009. [154] Adding to the underwhelming state of Dreamtea’s evidence in support of the present claim is the fact that the Miskin St unit had been bought by Dreamtea at a total cost of $647,000 ($625,000 purchase price plus stamp duty and other costs),213 yet the loan from Mackay Permanent Building Society was for only $300,000.214 When asked where the remaining $347,000 had come from Mr Klenowski said he did not know, that it might have come from him and that he presumed it came from him.215 Dreamtea’s balance sheet as at 30 June 2009 recorded a loan from Mr Klenowski of $218,957 which Mr Klenowski presumed to be the amount he contributed to the purchase of the Miskin St unit.216 Assuming that to be correct he could not explain where the further contribution for the purchase came from,217 although his subsequent answers seemed to assume it came from a financial institution’s loan.218 [155] The application for the loan which resulted in Dreamtea’s line of equity for $300,000 towards the purchase of Miskin St was signed by Mr Klenowski as director of Dreamtea and as individual guarantor.219 The loan applicants were listed as both Dreamtea and Mr Klenowski. In the application’s details of assets were listed some 209 T1-44 L22. 210 Ex 4A. 211 T1-46 L3. Mr Klenowski seemed to agree, speculatively, that the dividend must have been paid but even if only provided for it is an entry at odds with Dreamtea being in serious financial difficulty. 212 T1-46 L12. 213 T1-46 L25. 214 T1-46 L29. 215 T1-46 LL31-45. 216 T1-48 L23. 217 T1-48 L27. 218 T1-84 LL35-45. 219 Ex 6. -- 46 of 61 -- 47 properties and bank investments or savings totalling $4,400,510 and in the details of liabilities was a solitary credit card debt of $12,000, giving rise to a “net worth” recorded as $4,388,510. Mr Klenowski testified the assets listed represented the combined financial position of him, Dreamtea and his superannuation fund.220 They included two properties personally owned by Mr Klenowski worth $1,080,000.221 [156] It will be recalled the contract to sell the Miskin St unit was entered into on 25 November 2009 and the registration of the titles for the development’s subdivision occurred only five days later on 30 November. Mr Klenowski denied he was aware registration was imminent when he contracted to sell the Miskin St unit.222 That denial was unconvincing. The documents executed by the Houwings had been returned by the Houwings’ solicitor to Macrossan & Amiet in late October. Mr Klenowski would have had to execute them after that – he had not executed them prior to them being sent to the Houwings – and in any event, it is inevitable Macrossan & Amiet would have informed him of the much awaited receipt of the documents and the forthcoming registration. The implication of his evidence, that Macrossan & Amiet, Dreamtea’s own solicitors, did not inform him, Dreamtea’s sole director, that the long delayed act of registration was finally looming, is inherently unbelievable. [157] At the time the contract to sell Miskin St was entered into, I readily infer Mr Klenowski, the controlling mind of Dreamtea and as trustee of his superannuation fund, knew registration, and thus the payment to Dreamtea of the balance of the monies owing from the superannuation fund for the purchase of lots 6 and 8, was imminent. That is, he knew Dreamtea was about to receive $257,500 from his superannuation fund which could have been used to reduce Dreamtea’s then debt to Wide Bay Australia of about $288,000, thus tending to Wide Bay Australia’s supposed concern about the level of indebtedness. [158] According to Mr Klenowski, had money been received at some earlier time by Dreamtea from his superannuation fund it would have been deposited into the 220 T1-82 L31. 221 T1-82 L41. 222 T1-85 L23. -- 47 of 61 -- 48 Dreamtea loan account.223 Yet, as already mentioned, none of the supposed deposits from the fund towards the acquisition from Dreamtea of lots 6 and 8, deposits totalling $235,000, appear as payments into Dreamtea’s loan account. When this fact was drawn to Mr Klenowski’s attention he suggested the money would been paid into some other Dreamtea account or to Mr Klenowski “for subsidising Dreamtea”.224 [159] When it was suggested to Mr Klenowski he would have paid a real estate agent’s commission in any event if he sold the unit in the future he said that did not necessarily follow.225 He explained he had in the past sold a lot of properties privately and had chosen to use an agent in this instance because “it was an urgent sale required by the building society”.226 [160] Mr Klenowski acknowledged had the unit not been sold Dreamtea would have had to pay ongoing body corporate fees, rates, insurance and maintenance costs.227 He asserted the profit from rent would have far outweighed those costs.228 That is unlikely and Dreamtea’s own records, discussed above, suggest otherwise. Its profit and loss statement for the year ended 30 June 2009 records 2009 rent received by Dreamtea as only $8,800 whereas it records interest, obviously interest on the loan, as $44,480.229 On Dreamtea’s own records this was not a positive cash flow property. The notion that Dreamtea incurred any loss by having to sell the property is unsupported by its own records. [161] Finally, in this sorry litany of difficulties for this component of the claim, it is remarkable if matters were as financially pressing as alleged that Mr Klenowski did not contact the Houwings and tell them their conduct was causing such difficulty.230 In fact it is clear he deliberately refrained from communicating with them. 223 T2-2 L40. 224 T2-3 L31. 225 T1-39 L46 – T1-40 L3. 226 T1-40 LL1-5. 227 T1-86 L44. 228 T1-13 L13 229 Ex 4A. 230 T1-70 L45 – T1-71 L34. -- 48 of 61 -- 49 [162] Having regard to all of the above discussed problems I readily conclude the Houwings delay was not likely causative of the sale of the Miskin St unit. This component of the claim must therefore also fail. Declaratory relief re caveat Entitlement to lodge caveat per written agreement [163] The written agreement of 17 July 2007 provided for one each of the parties’ future lots under the development to serve as security lots. Clause 2.6 provided in the event one party was unable to pay its share of the project costs or repay its share of the project finance the other party would be “entitled to a transfer” of the defaulting party’s security lot. [164] Clause 2.7 provided: “Right to Lodge Caveat Dreamtea consents to Ochkit lodging a Caveat over the Dreamtea Security lot provided that such Caveat will be removed upon repayment of the Project finance and payment of all Project Costs. Houwing consents to Dreamtea lodging a Caveat over the Houwing Security lot provided that such Caveat will be removed upon repayment of the Project finance and payment of all Project Costs.” (emphasis added) Entitlement in dispute [165] Dreamtea lodged a caveat over the Houwings’ security lot, lot 4, on 14 December 2009.231 The caveat referred to the written agreement and the Houwings’ alleged default of their obligations. [166] In response, solicitors for the Houwings and Ochkit wrote to Dreamtea’s solicitors on 21 December 2009 requiring, pursuant to s 126(2) Land Title Act 1994 (Qld), that Dreamtea commence proceedings to establish the interest claimed.232 Dreamtea’s 231 Ex 1 p320. 232 Ex 1 p326. -- 49 of 61 -- 50 solicitors wrote back on 24 December 2009 asserting clause 2.7 amounted to a consent to the lodging of the caveat but indicating in any event that proceedings would be commenced.233 They enclosed a consent to caveat form requiring it be signed. Such consent has not been forthcoming. [167] Dreamtea seeks a declaration it is entitled to a caveat over the Houwing security lot, lot 4. The foundation unremarkably pleaded for its entitlement is the written agreement, particularly clause 2.7.234 Discussion [168] By clause 2.7 the Houwings expressly consented to Dreamtea lodging a caveat over their security lot. The consent was confined only by the requirement for its removal on repayment of project finance and all project costs. As already discussed there was no project finance but project costs were incurred and were to be borne proportionately. I have found some project costs remained, indeed remain, unpaid. The consent clause therefore remains operative and was certainly operative at the time the caveat was lodged. [169] The defendants’ main argument is that the plaintiff was not entitled to lodge the caveat because all project costs had been paid. That argument must fail given my earlier conclusion in Dreamtea’s favour that project costs remain unpaid. [170] The defendants also argue the plaintiff is estopped from relying on the default as the plaintiff has not issued a default notice pursuant to clause 3.2. That argument is misconceived for reasons already given as to the facilitative effect of clause 3.2. [171] It is also submitted that clause 2.7 is dependent upon there having been project finance, which there was not. However, the absence of project finance does not logically invalidate the clause’s effect. Moreover it does not remove the operative effect of the clause’s reference to payment of project costs. Clearly the clause is calculated at allowing each party the security of a caveat by consent pending 233 Ex 1 pp327, 328. 234 SOC [14] – [17]. -- 50 of 61 -- 51 repayment of any project finance outstanding “and” payment of any project costs outstanding. [172] This only leaves an argument that there is no need for the declaration sought. Declarations are a discretionary remedy. Ordinarily a declaration will not be given if the subject matter of the proceeding is hypothetical or if the grant of relief would be of no utility to the parties.235 [173] The present dispute is not hypothetical. Pursuant to a contract by which it is still bound the defendants consented to the lodging of the caveat yet have acted at odds with that consent, requiring the plaintiff to institute proceedings to establish the very entitlement to which the defendants contractually consented. [174] Further it cannot be said the declaration sought, that the plaintiff is entitled to a caveat over lot 4, will have no utility. It will expressly confirm an entitlement which, despite their contractual consent to the entitlement, the defendants chose to put and keep in issue to the present. [175] I will therefore make the declaration. Orders in SC 1/2010 [176] My orders are: 1. Judgment for the plaintiff in the amount of $2,865.70 damages plus interest to be determined. 2. It is declared that the plaintiff is entitled to a caveat over the Houwing security lot being lot 4 on SP218357 in the county of Carlisle Parish of Bassett, being that land contained in title reference 50792285. 235 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 582. -- 51 of 61 -- 52 3. I will hear the parties as to interest, as to whether the damages are payable by both defendants or only the first defendant and as to costs at 9.15am on 29 March 2017 at Mackay. 4. Written submissions as to interest and costs are to be filed and served by 4pm on 7 March 2017. PART B: CLAIM S71/2010 The claim [177] The plaintiffs – Mistranch, Dreamtea and Mr Klenowski – seek various orders founded on an alleged entitlement to be indemnified by the defendants – Ochkit and the Houwings – for costs incurred by the plaintiffs in respect of a proceeding to which the defendants were not a party. [178] The sum claimed, setting aside interest, is $56,489.02. That is said to be the gap between the total costs and the standard costs recovered by the plaintiffs. [179] It can be observed immediately that this is another instance of litigation over-reach against the defendants who, if liable at all, would surely only be liable for 5/9ths of that gap amount. Background [180] Mr Matthew McKenzie suffered personal injuries on 23 April 2007 when a dozer he was operating rolled at the development site at Florence St. [181] The nature of the development and the players involved has been canvassed above. Mr McKenzie was an employee of Vella’s Plant Hire Pty Ltd (“Vellas”). That firm had done earlier work on the development, invoiced by it as “clearing & grubbing” to AMEC, in September 2005.236 It will be recalled AMEC is the trading name of Mistranch’s engineering consultancy business and it managed the carrying out of the 236 Ex 29 p3. -- 52 of 61 -- 53 development. That earlier invoice had been forwarded to the Houwings by Mr Klenowski with a request that they arrange for payment of 5/9ths of it.237 [182] Vellas had been engaged by Mistranch trading as AMEC again in 2007, to perform de-grassing work at the development site. It was this work in which Mr McKenzie was involved at the time of the accidence on 23 April 2007. The bulldozer was on Council land when it rolled down a steep batter traversing onto Houwing land as it did so.238 Mr Klenowski partly witnessed the incident and emailed his report about it to the Houwings the following day.239 [183] On 14 April 2009 Mr Klenowski forwarded a memorandum on Dreamtea letterhead to the Houwings in which he referred to Mr McKenzie’s accident and went on to say: “So far McKenzie’s lawyers (Shine Lawyers) have pursued Australian Mining Engineering Consultants (AMEC), who they believe is the developer. McKenzie is attempting to pursue Vella’s Plant Hire and AMEC for $3.5 million. To date my total legal expenses have been $22,995.44 for S Naylor, solicitor, Macrossan & Amiet and K Staffa, barrister, Staffa Lawyers. I am not seeking any payment from you for these expenses. On 20 April 2009 there will be a conference between McKenzie, Shine Lawyers, Workplace Health and Safety, S Naylor, G Crow (my barrister) and G Klenowski. Following this conference S Naylor and K Staffa believe that McKenzie may target the developers, Dreamtea Pty Ltd and J & C Houwing. If this occurs then you will need to pay for your legal defence.”240 [184] By letter to the Houwings dated 26 June 2009 Macrossan & Amiet advised the amounts outstanding on development expenses included: “Legal costs to date with respect to Defence of claim by Matthew McKenzie arising from bulldozer accident on your land on 23 April 2007 – $31,312.76.”241 [185] Macrossan & Amiet wrote to the Houwings’ solicitors, Condon Charles, on 7 August 2009 telling them, inter alia: 237 Ex 29 p2. 238 T3-33, L35. 239 Ex 30. 240 Ex 29 p277. 241 Ex 29 p281. -- 53 of 61 -- 54 “In relation to McKenzie, the fact that your clients have not requested the work be undertaken is irrelevant. My clients will pursue recovery of the full amount from your clients.”242 [186] Mr McKenzie commenced personal injury proceedings against Vellas and Mistranch in December 2009, alleging loss arising from negligence, breach of contract and breach of statutory duty.243 Vellas in turn claimed contribution against Mistranch and joined Mr Klenowski and Dreamtea as third parties in November 2010. [187] Mr McKenzie settled his claim with Vellas and did not proceed with his claim against Mistranch. The contribution and third party proceedings went to trial in March 2012 before McMeekin J and the claims by Vellas were dismissed.244 [188] Vellas were ordered to pay the costs of Mistranch, Mr Klenowski and Dreamtea to be assessed on the standard basis. There was no assessment because the parties negotiated the quantum of standard costs, settling costs from $85,000 in about late April 2012.245 [189] On 29 March 2012, the same day McMeekin J’s reasons for judgment were delivered, Macrossan & Amiet wrote to Condon Charles enclosing the reasons for judgment and advising that their clients would proceed with their claim for indemnity. The letter continued: “The quantum of the indemnity sought from your clients will be able to be particularised once the issue of costs payable by Vella’s Plant Hire Pty Ltd has been resolved. At that point our client will be able to further particularise its claim against your clients and will at that time file and serve an amended statement of claim particularising its claim.”246 [190] The present proceeding, SC17 of 2010, was commenced by Mistranch in June 2010 when the personal injuries proceeding was current. At that point Mistranch claimed indemnification for any liability as well as legal costs. The proceeding stalled until October 2012, well after McMeekin J’s decision in March 2012, when leave was given to proceed and Mr Klenowski and Dreamtea were added as plaintiffs. 242 Ex 29 p284. 243 Ex 29 pp 40-48. 244 Ex 29 p49; Ex 32; [2012] QSC 77. 245 Ex 29 p275; T3-35, L14. 246 Ex 29 p289. -- 54 of 61 -- 55 [191] The total amount said by Mr Klenowski to have been paid to legal representatives in defence of the McKenzie and Vella’s claims was $141,489.12.247 A schedule of total fees records that with $85,000.00 recovered as settled standard costs, the balance not recovered was $56,489.02. That balance was said by Mr Klenowski to have been paid to the legal representatives, half by Dreamtea and half by his superannuation fund,248 presumably meaning Dreamtea paid half in its own right and half as trustee for the Klenowski Superannuation Fund. [192] The schedule of total fees reveals subtotals consisting of $113,495.12 payable to Macrossan & Amiet and $27,993.90 payable to Staffa Lawyers and O’Connor Partners Commercial Lawyers, both being law firms in Perth. It appears Staffa Lawyers became or was incorporated into O’Connor Partners at some stage during the litigation. Mr Staffa, a barrister who had done work for Mr Klenowski in the past, was apparently a lawyer at both firms.249 Mr Klenowski accepted the invoices tendered in evidence showed he had continued to use Mr Staffa, even while using Macrossan & Amiet and their briefed Queensland counsel.250 Basis of alleged liability [193] The foundation for liability now advanced by the plaintiffs is that in engaging Vellas, Mistranch did so as an agent for the Houwings, Ochkit and Dreamtea. [194] The defendants’ pleading acknowledges it was agreed between Mistranch, Dreamtea, Ochkit and the Houwings that the plaintiff would be project manager and “be delegated control of the joint development.”251 The defendants also plead Mistranch was “responsible for the supervision (including day to day supervision), management and accounting in relation to all matters and things relating to the development of the lands.”252 Accordingly, it is uncontroversial that Mistranch engaged Vellas to undertake de-grassing works as agent for Dreamtea, Ochkit and the Houwings. 247 Ex 29 p50. 248 T3-37 L7. 249 T3-39 L30, T3-40 L15. 250 T3-40 L17. 251 Further Amended Defence, [1.5.11.a]. 252 Further Amended Defence, [1.7.23]. -- 55 of 61 -- 56 [195] The plaintiffs submit the relationship of agency between the defendants and Mistranch gives rise to a right of indemnity on the part of Mistranch with respect to all liabilities incurred in the reasonable performance of the agency. This right of indemnity is submitted to continue to Mistranch’s costs of an unsuccessful action against it where Mistranch was included in the action by reason of its alleged conduct in the course of acting as agent. [196] An alternative pathway to payment of the amount claimed is that the costs are said to have been incurred as an incidence of a joint venture or joint venture agreement. While I would not categorise the development project as a joint venture it is unnecessary to consider this aspect of the claim in that it could not realistically succeed if Mistranch was not in any event an agent of the defendants. [197] Dreamtea’s entitlement to relief is said to flow from its right to a 5/9ths contribution from the defendants consistent with the arrangement for proportionate payment of project costs under the written agreement, an arrangement which was also in place prior to the agreement. I do not perceive the issues of contribution arise in this instance in the way they did in the former claim. The evidence of Mr Klenowski’s manner of control of his various entities demonstrates that as the controlling mind of them he is readily able to move money between them for financial convenience. The court need not involve itself in those machinations. It is Mistranch which was the defendant’s agent, not Dreamtea. If Dreamtea chose to reimburse Mistranch pending indemnification by the defendants that was its choice. It had no obligation so to do and doubtless Mr Klenowski can reverse such a payment on the making of any award here to Mistranch. I would dismiss the claim by Dreamtea. [198] As to Mr Klenowski it is said he is also entitled to an indemnity as agent. This misconceives who his principal is in this context. It is Mistranch not the defendants. If Mr Klenowski needs indemnification as agent he ought sue his principal, Mistranch. I would dismiss the claim by Mr Klenowski. [199] Finally, the claim also seeks declaratory relief. In the circumstance of this claim such relief is unnecessary. A declaration would not serve any purpose additional to the primary orders sought. I decline such relief. -- 56 of 61 -- 57 Discussion [200] It is well established the relationship of agency gives rise to a right of indemnity from the principal with respect to all liabilities incurred in the reasonable performance of the agency.253 [201] It is not suggested that the conduct engaged in by Mistranch which caused it to be sued was being engaged in other than in the reasonable performance of the agency. Prima facie, Mistranch’s costs incurred in defending such a suit were liabilities resulting from it having been engaged in the reasonable performance of the agency. [202] Such a conclusion is consistent with the English decision of Famatina Development Corporation Ltd.254 There an employee engaged to report on property values and options provided an oral and written report which identified misconduct by a director in respect of some of the properties. The director sued the employee for slander and libel. The action failed but the employee incurred costs in defending it. His action seeking recovery of the amount of those costs from his employer failed at first instance but succeeded on appeal. Lord Cozens-Hardy MR found of that appellant:255 “He was undoubtedly appointed to be the agent of the company for many purposes and all he had done was done in pursuance of his duties as agent. Therefore he came within the well settled rule that an agent had a right against his principal, founded upon an implied contract, to be indemnified against all losses and liabilities, and to be reimbursed all expenses incurred by him in execution of his authority.” [203] In National Roads & Motorists’ Association v Whitlam256 Campbell JA, with whom Beazley JA and Handley JA agreed, observed that conclusion was an example of the principle stated in Sheffield Corporation v Barclay,257 namely: “It is a general principle of law when an act is done by one person at the request of another which act is not in itself manifestly tortious to the knowledge of the person doing it, and such act turns out to be injurious to the right of a third party, the person doing it is entitled to an indemnity from him who requested that it should be done.” 253 Jones v Canavan [1972] 2 NSWLR 236. 254 [1914] 2 CH 271. 255 Ibid, 282. 256 (2007) 25 ACLC 688; [2007] NSWCA 81, [89]. 257 [1905] AC 392, 397. -- 57 of 61 -- 58 [204] The applicable principles are correctly summarised in G E Dal Pont’s Law of Agency as follows: “The law recognises that an agent, who as a consequence of carrying out the principal’s instructions is made a defendant in an action and rightly defends the action, is entitled to be indemnified for its costs taxed on an indemnity basis. Were the agent entitled merely to party and party costs, he or she would be out of pocket for carrying out the terms of the agency on behalf of the principal. So, even though an agent who has succeeded in litigation in the course of the agency may only be entitled to party and party costs from the losing party, the principal is liable to reimburse the agent for the difference between party and party costs and the agent’s costs in litigating the matter, except to the extent that those costs are unreasonably incurred or unreasonable in amount.” (citations omitted)258 [205] The defendants’ counsel submitted Ochkit and the Houwings were not parties to the McKenzie action, making it incorrect to assert that Mistranch acted as their agent in defending the proceedings. As the above analysis of relevant legal principle demonstrates, Mistranch’s right of indemnity is not so confined. Its right of indemnity arises from it having been engaged in the reasonable performance of its agency on behalf, inter alia, of the defendants in carrying out the activity which attracted the suit. [206] It was further contended for the defendants that the plaintiffs are estopped from bringing the present claim. It was submitted an estoppel by convention or common law estoppel arose on the sending of Mr Klenowski’s memorandum of 14 April 2009 wherein he indicated he was not seeking any payment from the Houwings for his legal expenses to date.259 The defendants contend they relied upon that memorandum and the conduct of the plaintiffs to their detriment. However, the defendants called no witness in support of this contention. It is true the defendants’ counsel, through cross-examination of Mr Klenowski, established the defendants gave no instructions in relation to the defence of the litigation,260 did not seek to be joined in the action,261 did not discuss the subject of the action with Mr Klenowski,262 were not told by Mr Klenowski that McKenzie had started legal action and were not told by Mr 258 Third Edition [18.13]. 259 Citing Meagher, Gummow and Lehane Equity Doctrines and Remedies Fifth Edition [17-015]. 260 T3-36 L22. 261 T3-36 L28. 262 T3-44 L28. -- 58 of 61 -- 59 Klenowski about the third party proceedings. On the other hand it is apparent from the Macrossan & Amiet’s correspondence referred to above, that the defendants would have been aware from as early as 26 June 2009 of the prospect they would be required to pay legal costs associated with the McKenzie matter. I am unwilling to infer from the defendants’ non-intervention in the McKenzie proceeding that they were acting on an ongoing understanding they would not subsequently be pursued in connection with it. [207] The defendants also rely upon Port of Melbourne Authority v Anshun Pty Ltd263 to argue the plaintiffs are estopped from the present claim, having not joined the defendants in the proceeding before McMeekin J. This argument may have had greater force had the plaintiffs, in pursuing this claim, sought an outcome in conflict with the judgment of McMeekin J, but in the end result they did not do so. It cannot be said the relief ultimately pursued through the present claim was so relevant to the issues for determination by McMeekin J that it was unreasonable not to have sought to litigate the claim now relied upon as part of the proceeding before McMeekin J. As was observed in Port of Melbourne Authority v Anshun Pty Ltd, it is necessary to bear in mind: “[T]here are a variety of circumstances…why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, matters extraneous to the actual litigation, to mention but a few.”264 [208] Given the result here sought cannot be said to be in conflict with any orders of McMeekin J, the plaintiffs are not estopped from seeking the relief now claimed. [209] The much more concerning difficulty highlighted by the defendants is the absence of evidence as to the reasonableness of the costs incurred and the reasonableness of the settlement of standard costs. [210] As to the reasonableness of costs, the solicitors’ invoices are in evidence. In the absence of submissions identifying any specific issue of concern in respect of the Queensland legal representatives costs I would be unwilling to infer 263 (1981) 147 CLR 589, 598, 601-603. 264 Ibid 603. -- 59 of 61 -- 60 unreasonableness. However, issue was taken with Mistranch’s need for an interstate lawyer while also represented by a Queensland based solicitor and barrister. No persuasive explanation was advanced as to that need and without such explanation I am unwilling to infer the nature of the case reasonably required the involvement of an additional lawyer from interstate. I would not take account of such costs as forming Mistranch’s total reasonable costs. [211] The absence of evidence as to the reasonableness of the settlement of standard costs is an even greater problem. There was evidently no costs assessment, nor was one procured and exhibited to assist the court in concluding with any degree of precision that the settled standard costs amount was consistent with the actual standard costs. [212] The dilemma arising is that on the one hand I accept Mistranch is entitled to indemnification to the extent of 5/9ths of its total reasonable legal costs after the reduction of that total by the amount of its allowable costs assessed on the standard basis. On the other hand the evidence does not allow of any precision as to the calculation of the indemnity amount. A pivotal consideration in favour of doing the best the court can in engaging in that calculation, rather than simply dismissing the claim for want of proof, is that on the evidence before me I readily infer from the experience of the courts that there would have been a material gap between what the standard costs would actually have been and what Mistranch’s reasonable costs would have been. An indemnity of some substance is inevitably due. [213] The appropriate course is to conservatively estimate, on the information available, a minimum likely amount that would in the court’s experience have been arrived at were a precise, fully informed calculation able to have been made. That estimation ought be sufficiently conservative to allow for the prospect, unlikely as it seems, that despite the singular legal representation some components of the costs may have been attributable only or substantially to acting for Mr Klenowski and Dreamtea, that is, were not Mistranch’s costs. [214] I note the Queensland lawyer’s invoices total $113,495.12. Reducing that amount by the settled costs figure leaves $28,495.12. A 5/9ths apportionment of that figure is $15,830.62. I would discount that figure by 10 percent to $14,247.56 in order to -- 60 of 61 -- 61 arrive at an amount I safely infer would at least have been awarded by the court if it had been equipped to engage in a properly informed and precise calculation of the indemnity amount. [215] I will award that amount to Mistranch by way of indemnification. I will hear the parties as to the calculation of interest and as to costs. Orders in SC 71/2010 [216] My orders are: 1. Judgment for the First Plaintiff in the sum of $14,247.56 plus interest to be determined. 2. The claims of the Second and Third Plaintiffs are dismissed. 3. I will hear the parties as to interest and costs at 9.15am on 29 March 2017 at Mackay. 4. Written submissions as to interest and costs are to be filed and served by 4pm on 7 March 2017. -- 61 of 61 --